Tesla's bubble has burst
In late October 2022, we stated the bear market was poised to weigh heavily on shares of Tesla. Since then, the price dropped from 207.28$ to a low of 108.24$ (on 28th December 2022), representing almost a 48% decline. After that, the company’s shares briefly rose above 124$. However, with the start of a new year and its first trading day, shares fell more than 13% following the disappointing report concerned about the automaker’s delivery number.
As if it was not enough, the company has been experiencing troubling quality reports for years and regulatory scrutiny over its autopilot feature. Furthermore, its rivals are no longer behind the company’s technological progress, producing competitive electric vehicles and threatening Tesla’s well-being.
That comes as a blow to the company, which was once valued at more than the nine biggest automakers combined (globally) while producing only a fraction of vehicles compared to its rivals. Subsequently, that leads us to speculate that the hyper-inflated bubble of Tesla burst and will never reinflate to its previous size.
The production number of cars by year (Tesla):
2022 = 1 369 611
2021 = 930 422
2020 = 509 737
2019 = 365 284
2018 = 254 530
2017 = 101 027
2016 = 83 922
Sales by brand (rough estimates) for comparison:
Tesla (2022) = 1.31 million
BMW Group (2021) = 2.52 million
Mercedes Benz cars (2021) = 2.09 million
Ford Motor Company (2021) = 3.94 million
General Motors Company (2021) = 6.29 million
Toyota (2021) = 9.56 million
Volkswagen (2021) = 8.88 million
Hyundai Kia (2021) = 6.66 million
Honda (2021) = 4.45 million
Illustration 1.01
Yesterday, shares of Tesla hit a new low at 104.64$. Currently, the price is too far from its 20-day and 50-day SMAs. Therefore, we are cautious as this often precedes price retracement toward these moving averages.
Technical analysis
Daily time frame = Bearish
Weekly time frame = Bearish
Illustration 1.02
Rising volume hints at tremendous selling pressure in shares of Tesla.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
As if it was not enough, the company has been experiencing troubling quality reports for years and regulatory scrutiny over its autopilot feature. Furthermore, its rivals are no longer behind the company’s technological progress, producing competitive electric vehicles and threatening Tesla’s well-being.
That comes as a blow to the company, which was once valued at more than the nine biggest automakers combined (globally) while producing only a fraction of vehicles compared to its rivals. Subsequently, that leads us to speculate that the hyper-inflated bubble of Tesla burst and will never reinflate to its previous size.
The production number of cars by year (Tesla):
2022 = 1 369 611
2021 = 930 422
2020 = 509 737
2019 = 365 284
2018 = 254 530
2017 = 101 027
2016 = 83 922
Sales by brand (rough estimates) for comparison:
Tesla (2022) = 1.31 million
BMW Group (2021) = 2.52 million
Mercedes Benz cars (2021) = 2.09 million
Ford Motor Company (2021) = 3.94 million
General Motors Company (2021) = 6.29 million
Toyota (2021) = 9.56 million
Volkswagen (2021) = 8.88 million
Hyundai Kia (2021) = 6.66 million
Honda (2021) = 4.45 million
Illustration 1.01
Yesterday, shares of Tesla hit a new low at 104.64$. Currently, the price is too far from its 20-day and 50-day SMAs. Therefore, we are cautious as this often precedes price retracement toward these moving averages.
Technical analysis
Daily time frame = Bearish
Weekly time frame = Bearish
Illustration 1.02
Rising volume hints at tremendous selling pressure in shares of Tesla.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
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