Tesla stock shook off losses and turned higher Wednesday following reports the EV giant's Germany plant has lowered its vehicle production target. The move comes after a two-day bounce, which broke a string of six straight losses.
Tesla stock fell early before gaining 1.6% to 236.86 Wednesday during market trading. Business Insider reported Tesla lowered the production target of its factory in Germany to 4,350 a week in July and August after hitting 5,000 a week in March, and plans to reduce it further.
Tesla announced plans in July to increase the factory's capacity to 1 million cars per year. However the company did not outline how it would reach that goal. Meanwhile, at the end of the second quarter, Chief Executive Officer Elon Musk told analysts Q3 production will likely "be a little down" due to summer shutdowns for factory upgrades.
Analysts still predict record quarterly deliveries of 473,000 for TSLA, according to FactSet.
There is also more executive shake-up at Tesla. On Monday, Colin Campbell, who served as vice president of powertrain engineering, announced on LinkedIn he had left Tesla after seventeen years. Campbell is joining Redwood Materials as chief technology officer. Redwood Materials was founded by Tesla co-founder and board member JB Straubel.
This comes after Tesla announced on Aug. 7 that Chief Financial Officer Zachary Kirkhorn had stepped down. The EV giant reported in federal filings that Vaibhav Taneja took over from Kirkhorn on Aug. 4. Taneja will now serve as CFO as well as his current role of chief accounting officer.
Tesla Stock: What's It Doing?
TSLA shares eased in early trade before reversing higher. The stock is almost 11% higher for the week — after a three-week slide.
Shares had initially pulled back after the automaker reported second-quarter financials on July 19. Investor concerns over falling gross margins outweighed the global EV giant's above-forecast earnings and revenue. News of sales from Cathie Wood's ARK Invest ETFs may also have fueled some downside momentum.
Tesla stock declined more than 11% to 215.49 last week in six consecutive losses. Two weeks ago, Tesla stock undercut support at the stock's 50-day, 10-week moving average. TSLA then fell more than 2% below the 10-week line, a clear sell signal, according to IBD analysis.
Shares roared back more than 7% Monday. On Tuesday, an early 4% gain put TSLA stock above its short-term 10-day moving average. Shares pulled back to a 0.8% advance, closing effectively even with the 10-day line.
Tuesday's rally petered out at 240 — the level of its late-June low. The 240 level is also just below the stock's 21-day exponential moving average.
So any or all of these could be presenting resistance to the stock's rebound. That could mean a longer period of consolidation. It also sets up the possibility for a powerful punch through that combined resistance and move shares higher.
Keep in mind, the stock market remains in a correction. Monday's advance marked the beginning of a rally attempt. However, TSLA shares remain well below their 50-day line. Amid the recent spate of selling, it's clear that the stock requires more time to consolidate before a new entry emerges.
Investors should be playing defense with their capital and wait for a decisive move by Tesla stock — at least back above the 21-day, and preferably above the 50-day moving average, before considering a new purchase.
Tesla stock ranks fourth in IBD's automaker industry group. It has a 95 Composite Rating out of 99. Tesla stock has a 88 Relative Strength Rating and its EPS Rating is 94 out of 99.
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