All

Tesla Stock Price Analysis – When Should You Buy TSLA?


Jul.05.2017

Tesla Stock Price Analysis: One could argue that Tesla (NASDAQ: TSLA) is more than just a car manufacturer. Under Elon Musk's leadership, Tesla is transforming into a comprehensive energy solution provider. No wonder the TSLA stock price skyrocketed to fresh highs of 386.84 in June 2017 on the hype. However, as an investor, we should consider the actual market value of the futuristic company rather than the market hype. Which is exactly what Goldman Sachs did today.  Now the question is, how low can Tesla stock price go? When would be a good time to buy, and how long should you hold? Here is the IDDA approach to investment strategy development for our Tesla fans. We have already shared the TSLA investing strategy with our investing group members.

 

Get my updates. Free.

 

 

1- Fundamental Points

Who are they?

Unless you've been living under a rock, you'd know that Tesla is an American automaker, energy storage company, and solar panel manufacturer, co-founded by the business magnate and inventor, Elon Musk. Tesla's products mainly revolve around energy solutions, including its Powerwall energy storage, battery packs, solar panels, and electric cars. Since Tesla announced it would acquire SolarCity last year, it was clear Tesla wanted to do more than own the solar company outright -- it wanted to fully integrate its products into the Tesla brand and give them a design overhaul.

With that, one could rely solely on Tesla's holistic energy solutions to go about their day; power up their house during the day using the solar panel or Solar Roof, store the energy in Powerwall, and use that energy to charge their Tesla auto overnight.

Tesla also has a focus on autonomous driving technologies. It has been considered a leader because of its aggressive timeline to reach level 5 autonomy years ahead of the competition and the fact that it has the most advanced sensor suite available in a vehicle today. Consequently, it is also accumulating "big data" since its fleet of sensor-equipped vehicles are in the hands of customers.

However, according to Navigant Research, Ford and GM respectively took the first and second positions despite having timelines to full autonomy in 2020 and 2021 versus Tesla planning a level 5 coast-to-coast demo ride by the end of the year. But when it comes to Tesla stock price analysis, can this data be trusted? According to various technical experts, Tesla is still way ahead of its competition. Let's take a deeper look into it.

Free MasterClass: 3 Secrets to Making Your Money Work for You

Whole Foods stock analysis

Who are their competitors?

Tesla could be the only holistic energy solution providing company whose stock is available to public shareholders. However, it has major and newbie competition to each of its divisions. Let's divide the competition into two groups: automotive, and renewable energy. Specifically, let's focus on the hot topics, Tesla Model 3 and Tesla Solar Roof.

Tesla Model 3 Autonomy Competition: While Tesla could be considered the leader in autonomous cars, on Wednesday Sweden-based Volvo indicated it is mounting an ambitious challenge to Tesla Inc.'s electric cars. While representing potentially the biggest bet yet against gasoline and diesel cars, the announcement follows a blueprint being drawn up by Toyota Motor Corp., Volkswagen AG and Daimler AG. Those companies plan to sell millions of electric cars by 2025 .

Tesla Model 3 Autonomous Features: Every Tesla Model 3 will have the hardware for Autopilot technology for semi-autonomous driving, including the base model. We commend Tesla for this announcement as the Nissan Leaf has zero advanced driver assists and the Chevy Bolt will only have basic collision prevention driver assists.

However, Autopilot convenience features, like adaptive cruise control, self-parking and autonomous lane-changing assists are optional. Tesla currently charges $3,000 to add the convenience features to the Model S and X.

Tesla Model 3 Luxury Competition: The Tesla Model 3 competes with luxury gasoline and mainstream electric vehicles. On the luxury side, it's base price puts it in the crosshairs of the BMW 3-series, Mercedes C-class, Audi A4 and Lexus IS – all gasoline sedans.

There's also the all-electric BMW i3 and plug-in hybrid electric (PHEV) Audi A3 Sportback e-tron, which have higher base prices but a shorter pure-electric range.

Tesla Model 3 Mainstream Competition: The mainstream competition consists of current available EVs, like the Ford Focus Electric, Kia Soul EV, Volkswagen e-Golf and Nissan Leaf. Competition gets tougher if you expand to include PHEV's from Chevrolet, Ford, Hyundai and Kia.

But that's not all, because the competition from EV makers heats up, too. Chevrolet announced the Bolt EV, with 200 miles of all-electric range at CES 2016 and availability by the end of the year.

Nissan is expected to replace the aging Leaf with a newer, longer-range model in the near future, and Hyundai's upcoming all-electric Ioniq is expected to have 110-miles of range.

Good to know: Tesla’s major competition likely doesn’t come from the world’s established auto companies. Out of the 30 names which applied for autonomous vehicle testing permits in April 2017, 11 were not established auto makers or suppliers. This could imply that non-auto players may have a slightly larger incentive to bring autonomous electric vehicles to market quickly. Which could ultimately impact out future Tesla stock price analysis.

Tesla Solar Roof: Why solar panels have been around for a while and manufactured by a handful of other companies, Tesla Solar Roof is a creation of its own kind. Unlike traditional panels that can be installed onto your current roof, the Solar Roof solution requires that you replace your existing roof with Tesla’s blend of non-solar glass tiles and solar-enabled glass tiles.

As opposed to the ugly panel installments, Tesla Solar Roof is attractive, durable and has infinity warranty. However at the moment, installing this new roof does not make financial sense to most homeowners due to its high price. Just as Tesla’s luxury sports cars are out of reach for most drivers. But just like the advent of the Tesla Model 3, we could expect Tesla to hit the markets with a more cost effective Solar Roof in the future.

Tesla Solar Roof Competition: While Tesla’s gearing up to ship its first batch of solar-panels-that-look-just-like-normal-roofs, other companies are venturing into the fray. One such startup, the Palo Alto, CA-based Forward Labs, is now accepting pre-orders for its building-integrated solar panel design—which looks like a normal metal roof.

Forward Labs claim that its roof is capable of producing nearly double the energy of other roofing products, while costing as much as 33 percent less than Tesla’s design. According to its website, the Forward Labs solar roof gets you 19 watts per square foot of energy density, at about $3.25 per watt and installed in two to three days.

Market cap: Tesla's market cap stands at $53.728B, which is 5.5 times smaller than Volvo's $298.204B. However it is comparable to BMW's $52.986B, GM's $52.33B and Honda's $50.806B. It is 1.2 times larger than Ford's $44.996B.

Fundamental Thoughts: While the hype is up on Tesla, the company appears to have so many competitors popping up. However, as of now, Tesla remains the only holistic energy solution that connects all the futuristic dots.

3 Stocks I like better than Tesla: Join our Investing Group to Find Out

Whole Foods stock analysis

The market was also high on the Tesla hype for the past 6 months and appeared to be overvaluing the Tesla stock price, as I shared with our investing group members. This brings us to the second point of IDDA for the Tesla stock price analysis: Technicals.

 

2- Technical Points: Tesla Stock Price Analysis

Monthly Chart: Looking at the monthly chart for Tesla stock price analysis, TSLA certainly appears to be a growing stock. However, it also has a habit of long consolidation periods. When it first went public in 2011, Tesla stock price consolidated in a narrow range between $22 and $40 for almost three years. Then it had its first big jump and reached the high of $265 per share in 2014. This was the start of a new range trade between the median levels of $188 and $265 which lasted another two years.

Tesla Stock Price Analysis - Monthly Chart Tesla Stock Price Analysis - Monthly Chart

The most recent uptrend started at the end of 2016. It appears we could be up for a new consolidation in a new range, as the market hype slows down.

Daily Chart: By applying the Fibonacci and Ichimoku instrument to the daily chart, you'd notice two key factors. First, the Tesla stock price tested below the 23% Fibonacci level of $338.33 on Wednesday's selloff. Second, the Tenkan line is about to cross below the Kijun line, two key moving averages in the Ichimoku Kynko Hyo indicator.

Learn about Ichimoku: Get Ichimoku Secrets eBook

Tesla Stock Price Analysis - Daily Chart Tesla Stock Price Analysis - Daily Chart

 

Based on these observations, we can expect new support and resistance levels to develop for the stock price. The new support levels could ultimately become our buy opportunities.

3- Market Sentiment

Short term time frame Tesla stock price analysis shows a selloff mode for sure. On the 4-hour chart, the stock price has confirmed a break below the Ichimoku cloud. Based on our Ichimoku Secrets analysis, we could expect a brief correction before the Chiko span also breaks below the cloud.

Tesla Stock Price Analysis - Investing Strategy

As the 4th point of the IDDA, you must calculate your risk tolerance before deciding on which investing strategy is suitable for your portfolio. Join us for a free MasterClass to learn more.

In order to make sure the TSLA stock is the right asset to add to your portfolio, you must also conduct risk management for both yourself and the security you are analyzing.

Tesla's beta stands at 1.12 according to Yahoo! Finance. The beta of stock measures its volatility or systematic risk in relation to the market’s volatility. As increased volatility comes with increased risk. The market has a beta of 1, and if a stock has a beta of 1.12, it means that the stock’s volatility is 12% higher than that of the market’s. However, comparing this to other tech stocks, Tesla appears to have a lower beta. Which could be interpreted as a lower risk stock, especially if you are looking for a long-term investment.

Considering all points of the IDDA and the recent technical, market sentiment and fundamental developments, we could see new buy opportunities as low as $284 and $259 in the second half of 2017. If you don't own TSLA stocks and don't want to risk missing out, you can start adding it to your portfolio at 308.32 or market price as the selloff continues.

Here are Invest Diva's calculations for important approximate levels, with regards to the Tesla stock price analysis.

Support Levels Turning Point Resistance Levels

259.80

308.32

338.33

284.06

338.33

386.84

 

As an Invest Diva you should be able to put the 3 and 4 together and develop a strategy suitable for your portfolio and risk tolerance at this time. For further help, and if you want to chat with me regarding your trades, join our investing group here. It's awesome!!

If you liked this blog post, then you'll loved this full box gray

 

Related:

Whole Foods Stock Analysis – Should you spend your Whole Paycheck?

CLDR Stock – Is Cloudera Just Another Money-Losing Unicorn?

TripAdvisor Stock Analysis – Should You Skip on the Dip?

Kate Spade stock analysis – Calling a Spade a Spade

Back to Top

Learn How to Grow Your Wealth