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Tesla eyes production growth amid price slump

by Thea Coates Finance Reporter
23rd Jan 24 12:18 pm

Tesla Inc (TSLA) isn’t having the best 2024 as the stock has slumped almost 16% over the past 30 days. The company, despite surging 60% in 2023, hasn’t been able to carry the same level of bullishness in 2024.Trading.biz analyst Rahul Nambiampurath believes that the reduction of subsidies related to electric vehicles in key markets, including Germany, could be a reason for the lackluster 2024.

TSLA has experienced a YTD dip of 14.58% at press time, despite surpassing the Q4 2023 delivery production numbers by early January. The company sold a record number of vehicles — 484,507— in Q3 2023 and aims for a production target of almost 2.3 million vehicles for the current year amid the stock slump.

What are the expectations ahead of results?

With Tesla’s quarterly earnings report to be released two days from now, January 24, 2024, all eyes are on the EPS figures. Rahul’s analysis aligns with market expectations and puts TSLA’s EPS or Earnings Per Share figure at $0.74, down by almost 39% compared to last year’s EPS. A drop in EPS means that Tesla’s profitability has taken a hit in 2024.

“Despite the expected EPS dip, the revenue could be closer to the $26 billion mark, which would then be a 7% increment over the last year’s revenue numbers,” mentions Rahul. The possible rise in revenue could be due to the company meeting the production estimates. However, the profitability drop might be due to the following reasons, besides the already mentioned subsidy-reduction factor:

  • Increasing competition from BYD Company Limited, NIO, Li Auto, and more.
  • Concerns related to increasing labour costs in Germany
  • Decline in U.K.based performances
  • Technological challenges, especially the tired progress of the famed Full Self-Driving or FSD technology.

While these are only some of the reasons for the stock-based dip, it makes sense to look at TSLA’s price chart to understand more about the possible opportunities or threats, along the way.

More on TSLA’s price action

TSLA’s daily chart reveals an interesting pattern. One unit of TSLA is currently trading at $212.19 and seems to have breached the lower trendline of a pennant/triangle pattern.

The weakening RSI indicator, as depicted by the arrow, did indicate a price dip. However, strong support exists at $201.12 per the Fib retracement levels. If TSLA breaches this level, a deeper correction to $185 can be expected.

However, a rise above the $243 mark with high volume might invalidate the bearish trend. But then, with Tesla’s decision to halt production in Berlin and increasing scepticism regarding its CyberTruck lineup, the expectations of a sharper dip look more obvious.

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