Tesla has rebounded off its lows and is now coming up to major resistance as shown. Some investors believe the small increase in car production last quarter is something to be bullish about. However consider this:
market cap/cars sold TSLA 121416, General Motors 6475, Ford 6887
Using the measure market cap/cars sold, TSLA is clearly way, way overvalued. Even if TSLA grows at 35% per year, it will take many years before this ratio comes in line with GM and F. Making an electric car compared to an internal combustion engine (ICE) should be simpler, less moving parts. TSLA will have a lot of competition also from GM, F, Mercedes, BMW, Toyota and so on. Price margins will remain under pressure and sales may not be as robust as you think as ICE are gradually phased out as EVs come in. This will be a gradual process, not a massive ramp up. Sales growth may not meet the 35% pa as expected. Subsides for EVs are being reduced also in the US and China so margin pressure will be there. TSLA also has a huge debt on its balance sheet, this is a drag on its valuation. I expect TSLA to fall below $150. If it gets to $100, consider it then a buy.
Technicals - The RSI and ROC oscillators are topping out now, this is a sign of impending downward pressure on TSLA.
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TSLA just announced its second qtr earnings. Loss of $408 million, eps -2.31 per share. Although TSLA is slowly ramping up production, it is not converting it to profit. Its gross margins declined latest quarter. I suspect the cost pressures of lowering prices to compete against the many other car manufacturers and the burden of high debt and cost of sales is causing the losses. TSLA will be a buy when it gets undervalued at around $100 per share. Until then, short sell or stay on the sidelines. Latest price action downwards confirms this idea.
It seems you like your argument, but I fear it is wishful thinking. You are not factoring in market disruption forces already in motion, and you clearly overestimate traditional OEM's ability to develop what is a completely different type of car technology. They don't have the experience needed, the battery supplies required, or the will to really make this transition at a pace that would allow them to catch up. True competitors will be new startups from technology companies like google. Go back and do your homework. You deserve it to yourself.
victorko
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I think you underestimate the competition Tesla faces. In 2018 about 2 million EVs were sold, Tesla only made about 300000. Companies like BYD, Geely, Nissan and soon will be BMW, Mercedes, GM, F and Toyota all will make EVs. Don't underestimate the engineers at these competing companies. They have made cars for a century and to convert across to electric will be seemless. The Chinese companies have conquered the design of EVs already and will pose fierce competition to Tesla's future car plant in Shanghai. In the history of car manufacture, it has always been fiercely competitive and margins low, that is why these companies sell for close to book value. An EV is nothing different, it will be simpler than an ICE and have a few IT gadgets but it is still a car that people don't want to pay too much for. Tesla's cars currently are not for the masses, they are too expensive ripe for undercutting by competitors with more resources and experience making cars. I think Tesla will struggle all the way up to a production quantity of 1 million cars per year. Maybe when they reach this mark their cars will cost much less and will finally turn a profit. Until then, Tesla's p/b should only be 4 or 5 making it worth $150 at best.
Dig deeper. Your analysis assumes too much. Tesla is years ahead on the tech. Nobody has conquered EV design. Your stating this is a big red flag. Don’t by the hype. If your not vertically integrated your dead. Your talking points relies on OEM experience that does not exist. You will learn or lose out.