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Tesla stock is down about 30% since Elon Musk completed his purchase of Twitter. Technical analysts say the weakness goes beyond anything related to social media.
Liesa Johannssen-Koppitz/Bloomberg
Tesla
stock is down again, and investors once more are pointing fingers at Twitter. Fixing Twitter might not be enough to fix shares of the electric-vehicle giant, though. Technical stock market analysts see other factors at play.
Tesla stock (ticker: TSLA) opened higher Tuesday, along with the rest of the market following slower-than-expected U.S. inflation data for November. The stock traded at $175.05 early in the day, up more than 4%.
Investors didn’t have much time to celebrate as gains didn’t hold, and Tesla stock hit a new 52-week low on Tuesday at $158.03. They ended the data at $160.95, down 4.1%. while The
S&P 500
rose 0.7%, and the
Dow Jones Industrial Average
advanced 0.3%.
Tesla stock is now down about 11% for the week, and down almost 30% since CEO
Elon Musk
completed his acquisition of Twitter, underperforming the
Nasdaq Composite Index
by roughly 33% over that span.
Investors hope that Musk stops tweeting so much and that things calm down at his social media platform. That’s the catalyst Tesla bulls want.
Musk “will come to his senses that attacking his woke left customer base is hurting the {Tesla] brand and he will tone down his political views,” wrote
Future Fund Active ETF
(FFND) co-founder, and Tesla shareholder, Gary Black on Twitter Tuesday. He also expects Musk to name a new Twitter CEO soon.
Those actions might not give the EV giant’s shares the boost he hopes for. Tesla’s stock chart continues to look weak. Technical traders and analysts look at chart patterns, moving averages, and resistance levels as a shortcut to understanding how investors feel about a stock fundamentally, and where a stock might be headed in the short run.
Since early November, Tesla’s stock chart looks like it’s finishing up a head-and-shoulders pattern which, looks like a person shrugging. A stock hits a high and drops, forming the first shoulder. A new high is reached, followed by another decline, to create the head. A final rise takes the stock back up to the height of the first shoulder, only for another decline to bring the price below the “neckline” of the head.
Breaking $180 about a month ago was a signal to technical traders that more pain was coming for Tesla stock investors. The shares had some support around $166, but they’re now below that level. “The support zone between $120 and $155 from late 2020 [levels] looks next,” says CappThesis founder and technical stock market analyst Frank Cappelleri.
Katie Stockton, who founded of the technical-analysis shop Fairlead Strategies, believes that if Tesla stock closes below $166 for a couple of weeks, then $107 is in play.
John Roque of 22V Research has been the most bearish of those three, maintaining that the bottom for Tesla stock is closer to $100. “The trend overwhelms his tweeting, either way,” says Roque.
None of the three have fundamentally based target prices for Tesla stock. They are only trying to tell investors who look at earnings and cash flow what the chart says about investor sentiment. It isn’t what bullish investors want to hear.
If Tesla stock closes at current levels, its market capitalization will be less than $500 billion for the first time since Nov. 23, 2020, according to Dow Jones Market Data.
Write to Al Root at [email protected]
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