Tesla Is In Trouble: Their Earnings Call Confirmed It
Tesla has been in a down trend since the beginning of the year and it seems it might continue.
Summary
Tesla’s earnings number showed they missed estimates.
The price reaction to earnings show that the stock price might continue its down trend.
Consider checking out other motor companies.
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Earnings
Their reported earnings showed a big miss.
You might have heard that Tesla’s sales were waining and their stock price has been struggling.
These earnings numbers definitely confirm their sales are struggling.
Their stock price has been following a downward trend.
So far it is holding a support line.
If the price falls below that support line, the stock is in big trouble.
The price to earnings (PE) ratio is 111 right now.
The normal range is 30-50.
The stock is over valued.
TSLA needs to make more sales to increase their earnings and thus shrink the PE ratio.
Otherwise, the market will decide the stock is over priced and continue selling it.
As the stock price falls, the PE ratio will shrink to the normal range.
I recommend avoiding TSLA until things change.
If you want to be invested in motor companies, check out this post I wrote a few weeks ago.
Tesla Struggles: Check Out These Motor Companies Instead
In this post, we are going to review TSLA and other motor companies including Ford, Nissan, Toyota and Volkswagen.
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Terminology
Buy zone: The optimal price to buy. Investors would get the best long term gains in this zone.
Hold zone: The price is above the buy zone. Investors could continue to dollar-cost average (DCA) in this zone, but risk less optimal long term gains.
Warning zone: The price has lost momentum and is below the 50-day moving average. Investors should consider whether they feel comfortable holding or planning an exit.
Danger zone: The price has lost support and the potential for lower prices is much higher. Investors could hold for the long term as long as the 50-day and 200-day moving averages are not sloping downward. Ideally investors should consider exiting and buying again when the price has gained support and momentum.
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Disclaimer: The author is not a financial advisor. The information provided herein is not financial advice and should not be construed as such. This content is intended solely for educational purposes. The author will not be held liable if you decide to used this material as a basis for any financial decision-making. Investing involves risk, including the potential loss of your invested capital. Only invest what you are willing and able to lose.
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