Equities report: Tesla in trouble?

US stock markets continue to present some volatility, with the NASDAQ 100, DOW JONES 30 AND S&P 500 continuing their downwards trajectory. We recognise that there are a number of fundamental factors that could affect US and European stock markets and we are to discuss the fundamental environment surrounding Tesla and Meta and end the report with a technical analysis of Tesla’s stock price.

Tesla (#TSLA) misses Q3 delivery expectations

Tesla has missed its Q3 delivery expectations that had been set by market analysts. Furthermore, the company’s deliveries were nearly 7% less than the previous quarter, which may be a source of concern for the company which is also facing potential issues from an EU probe in the Chinese subsidies received by EV car makers, as we had reported last week.  According to a company statement, the cause behind the decline was attributed to “planned downtimes for factory upgrades, as discussed on the most recent earnings”, in addition the company stated that they were still on target for the 2023 volume target of around 1.8 million vehicles. The expectation that the company is still on track to meet its target volume, could provide some respite to investors, which may have been on the edge since last week. However, the fact that its deliveries came in much lower than last quarter, seem to be weighing on the company. Furthermore, we note that in the recent days, news outlets have been reporting that Tesla’s gigafactory in Germany has seen a “high frequency” of staff injuries. The potential safety issues in question, could weigh on the company’s ambitions to meet that target, as such we remain sceptical of the company’s claims that they are still on track to deliver near 1.8 million vehicles by the end of the year. On the other hand, should the company in their earnings report in two weeks’ time, indicate that they are still on track to deliver the aforementioned volume of vehicles, we may see the stock gaining support.

Is Meta (#FB) preparing to charge users to access to Facebook and Instagram?

Meta (#FB) according to a report by Reuters is preparing to charge EU users $14 a month in order to access Instagram and Facebook on their phones. The report also goes on to claim that users will be charged $17 to be able to use Facebook and Instagram on a desktop. However, the report also states that the fee’s will be optional for those who do not wish to be targeted by ads, whilst those who consent to their data being used by the company, would still maintain access to the free versions. The potential move by Meta, could have disastrous consequences in the short run for the company, as it may lead to a decline in its user base, which could weigh on the company’s ad-revenue. Although, over the long run, the company could potentially increase its ad-revenue, as it in theory would be able to use the data gained from users who are not willing to pay the fee for an ad-free services, whilst benefitting from users who are willing and able to pay for the ad-free services. The potential increase in revenue, should it occur, could support the company’s stock price. On the other hand, should the company face public backlash and be forced to abandon its proposed service, we may see the company’s stock being weighed down. We should note that at this point in time, no final decision has been made by the company and as such, if no public announcement is made and at the end of the day the alleged plan is scrapped, it may have little to no impact on the company’s stock price.

기술적 분석

Tesla (#TSLA), 4-Hour Chart

Support: 240.55 (S1), 223.45 (S2), 198.75 (S3)

Resistance: 250.90 (R1), 267.15 (R2), 285.95 (R3)

Tesla (#TSLA) appears to be moving in a downwards fashion, despite having tested resistance at the 250.90 (R1) resistance level. We maintain a bearish outlook for the stock and support our case is the RSI indicator below our 4-Hour chart which bounced off the 50 figure, in addition to the stock failing to break above the mid-range of the Bollinger bands, implying bearish market tendencies. For our bearish outlook to continue, we would like to see a clear break below the 240.55 (S1) support level, with the next possible target for bears being the 223.45 (S2) support base. On the other hand, for a bullish outlook, we would like to see a clear break above the 250.90 (R1) resistance level with the next possible level for the bulls being the 267.15 (R2) resistance ceiling.  Lastly for a neutral outlook we would like to see the company’s stock price remaining between the 240.55 (S1) and the 250.90 (R1) support and resistance levels respectively.

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