First, let me say that I’ve got nothing against Elon Musk or Tesla (TSLA). I have a Starlink system for camping, and I enjoy it very much. (I really hope it still works after writing this.)
That said, Tesla is flashing some real trouble signs.
Last week, we talked about how I thought Elon Musk should have bought the second largest uranium producer, Cameo Corp. (CCJ), instead of Twitter.
It would have cost him half the money and helped to create control of the electric vehicle (EV) revolution’s biggest problem: the infrastructure for charging.
While watching the news last night, I caught this gem of a story.
The cold weather has Tesla – and other EV drivers – waiting six hours or more to charge their vehicles. What’s worse is that once those vehicles are charged, they use their batteries twice as fast.
The lesson: EVs don’t like extreme weather. That’s bad, given the fact that every single night, the national news starts with telling us how many tens of millions of Americans are under an “extreme weather advisory.”
The Forecast Forecasts
Where am I going with this?
The honeymoon is over for EVs. Up to now, EVs have been laying on the couch eating bonbons while ICE vehicles have continued to work their butts off to keep us moving. (Yes, that’s a “Married with Children” reference for those of you that caught it.)
Sure, they’re pretty and were the envy of the road for a while, but they’re also expensive and hard to deal with. I’m still talking about EVs, in case you were wondering.
Tesla’s stock price is showing the strain of this relationship.
Last week, we talked about the fact that the stock was breaking below its 200-day moving average. This is one of those key trendlines that us market technicians watch closely as it represents a long-term trend for a stock.
That break is forecasting that Tesla shares are colliding towards $200, and a break of that psychological price will force the stock towards $150. For reference, shares traded to $100 last January, so a move to $150 isn’t unreasonable.
Here’s the icing on the cake.
Elon Musk is clearly a smart guy. News hit yesterday that he is looking to acquire more control of Tesla through his ownership of its stock.
It reminds me of Twitter, and how things have gone since he regained control of that company by way of controlling the stock.
They teach you that you shouldn’t run anything when you’re emotional. Let that sink in.
Until I see less emotion and more results, I’m staying short Tesla with a target of $150.
This has remained one of the “crowd’s” favorite stocks for years. It feels like the crowd is growing tired of the company sitting on the couch.
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About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.