- Tesla stock continues to suffer as delivery data plummets.
- TSLA also punished by Elon Musk distractions on Twitter.
- EV giant stock is oversold, buying the dip below $100 could be profitable.
The narrative of Tesla (TSLA) being an overvalued tech stock has certainly proven correct with a staggering 65% fall since September. There have been numerous factors at play. Tesla had a loyal following who largely ignored traditional valuation metrics. Elon Musk being distracted by Twitter and China woes has also added to the problem. This was further highlighted by December's China made deliveries being 44% lower monthly and 21% lower yearly.
Tesla is supposed to be a high-growth tech stock and the high valuation was based on growth not decline. So this hurts. However, closer to $100 there is potential for some value. Yes, the price-to-earnings (P/E) ratio is high at 30 versus 10 for the auto industry, but Tesla's margins are in a different league. Gross margins are north of 25%. Traditional automakers are not known as bastions of profitability, let's face it. Tesla stock is down again in Friday's premarket as the company cut prices in China and Asia.
Tesla stock forecast: TSLA oversold, buy the dip below $100
Technically, Tesla has broken the consolidation zone from August to November of 2020 and has now retraced to the earlier consolidation zone from the summer of 2020. This gives some support around the $100 area. Psychologically, $100 is just too tempting for bears to push through and perhaps trigger some stops and liquidations below. But the risk-reward is beginning to look more interesting to the upside and I saw that as a long-time TSLA bear. In June 2022, we placed a $133 target on Tesla and here we are!
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TSLA stock daily chart
Tesla stock is oversold on the weekly chart, well below the 200-week moving average and the daily chart above also shows the RSI is oversold too. Volatility remains high and rising, though, so buying out-of-the-money calls is not a cheap way to take advantage of any potential recovery in my view. However, my bias is to prepare to buy dips below $100.
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TSLA stock weekly chart
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