I ventured to read outside of my cozy Forex interest, and peeked into the US car industry and market. I was quite taken by the divergence between stock valuation and a growing sentiment of impeding collapse.
Here is one interesting company that clearly blazes its own trail for the future of the car company. Question is: Can it do this without a sufficient structural base of consumers? Would selling 27,000 cars over 4 years (that is, since its 2010 IPO public inception) while generating $1 billion in cumulative losses over the last six years inspire you to own this audacious company? Well, to frame it other terms: General Motors, a comparatively far less valued company to Tesla Motors manages to sell about 27,000 cars every day counting weekends.
It seems to me that the structural changes that are about to affect large luxurious ticket items are resting on a precarious base of consumers under aging demographic and widespread deflationary threats, where the former will redirect consumer needs and the latter will hinder consumer demand - Like the song says, you can't always get what you want, but you might get what you need.
- Is Tesla responding to that need?
PREDICTIVE/FORECASTING MODEL:
On a pure predictive/forecasting model basis, the short and mid-term data has confirmed a bearish market reversal signal, whereas the long-term remains bullish.
The following are the two most immediate bearish targets generated by the model:
1 - TG-1 = 162.55 - 16 MAY 2014
and
2 - TG-2 = 126.37 - 16 MAY 2014.
STRUCTURAL DATA:
A structural analysis brings up two supportive values, defining a probable range in which price action would find greatest resistance to move forward, namely the 133.07/147.96 range defined in the chart.
OVERALL:
Based on the predictive/forecasting model and structural data, the directional outlook is bearish for this car manufacturer. Taking into account a domestic and worldwide economies burdened by expected social and behavioral shifts, this trader's can't help wonder whether this stock is driving impaired by some Fed-laced inhalant, or whether it sees its own light at the end of one visionary tunnel.
Cheers,
David Alcindor Predictive Analysis & Forecasting TradingView Moderator
-------------------------------- Get instant signals, forecasts and analysis via Twitter. - Alias: 4xForecaster --------------------------------
PS: I have attached market indices pointing to significant highs or reversal levels, which point to a significant resistance against the current bullish status quo. - David Alcindor
Just a quick overlay on your chart. Thought it was worth sharing. Tim
4xForecaster
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Hi, @timwest - This is great. I live for these occult discoveries. The concept makes perfect sense. Thank you so much for sharing - David
timwest
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I wonder what will make the people who have already sold TSLA either sell more or instead, to buy it back. The one issue that TSLA does not have, despite its high valuation, is a retirement and pension problem. GM has a tremendous burden of managing the retirements of tens (maybe well over a hundred) of thousands of employees. In the long run, this was a major drag on the automakers. For Tesla, the profit per vehicle is off the charts and they don't carry inventory and they don't have much devaluation in the price of a used vehicle over time. Another benefit, the cost to run a Tesla is a fraction of running a GM (electricity is cheap relative to gas, no oil changes, no fan belts to break, very few maintenance issues), but the cost of repairing a broken one is a major hiccup. I've heard the tires are expensive to replace. The battery might be expensive too, but so far they seem to be lasting longer than people originally thought. There are many youtube videos on the high quality of the Tesla battery so it cycles well in hot or cold, unlike the competition who has skimped on battery quality. If you want a lifetime of entertainment, read some of the message boards on TSLA on any site and you can read all the negative and positive stories until you can't take it anymore. If you want, you can check out all of my posts on TSLA over the past few years here at TradingView and some of the many comments I have made over at Seekingalpha too. I think TSLA grinds its way sideways for awhile and chews up the shorts. The short interest on this stock has to be well north of 40% of the float, which means people have already sold and are hoping for the price to go down. Many pay very high prices to profit on a stock decline in TSLA, so there is clearly a LOT of money on the table hoping for a decline (shorts in the stock and put owners). This will be a full time job if you start monitoring TSLA, so welcome to the club David. All the best, Tim
Ah! Yes, I have already looked at your past charts on this stock, and perused through the net.
- Question: Is TSLA requiring a different valuation methodology, based on what you are mentioning. I really like the technology, and it definitely has leaped into the future. Is this a case of television preemting radio market, as it was at the beginning of the century? Is there something particular about TSLA that makes it a different industry leader - One video I saw that really blew my mind was their automated production. May be you posted that video, or I saw it on Twitter, but that was really revolutionary.
The predictive/forecasting model I have depends on the aggregate behavior of institutional players, but they too have been on the wrong side of the market many times over.
I will definitely keep a (weekly) eye on this one.
Thank you Tim for your amazing fundamental insights. Much appreciated and edified.
David
4xForecaster
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Here is the URL of the Tesla factory - Quite amazing automation:
Tesla's factory is amazing and yes I have seen the video. I subscribe to the Tesla youtube channel so I get every new video that Tesla posts. And great to have you tracking TSLA too!
LastBattle
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Interesting. Thanks.
I was deciding whether to get in again or not, after selling at $240.