Tesla is at local dips. Time to buy?

Tesla is at local dips. Time to buy?

2021-05-27 • Updated

This article describes how Tesla is positioned now on the stock market, what headwinds and tailwinds it has, and what analysts forecast.

US-China tensions

Joe Biden has left 25% tariffs on imported Chinese electric vehicles imposed by Donald Trump. As a result, Elon Musk’s plans to expand its Shanghai plant and make it a global export hub have been ruined. It’s not beneficial for Tesla, that’s why the company now is likely to decrease the proportion of China's output in its global production. 

What happens in China, stays in China

There were disputes over how Tesla handles consumer data and whether it can violate the national safety rules. As a result, Tesla agreed to build a data center in Shanghai by the end of June and store the data gathered by Tesla’s cars locally.

Tesla’s sales in China grow

Tesla's sales in China have been rising even despite the regulatory pressure from the Chinese government. The company has generated $3 billion in revenue in China in the first quarter of 2021, it’s three times more than a year ago and accounts for 30% of total Tesla’s revenue.

Competition is getting hotter

However, Tesla is not the only electric vehicle producer in China. It’s competing with Nio, which is quite popular in China. Besides, electric-vehicle competition is growing around the globe: Lucid Motors, Ford, and Volkswagen.

Chip shortage

There is a chip shortage around the world, and it creates some significant problems for electric-vehicle producers and Tesla as well. However, it cannot be viewed as a negative factor only for Tesla, it’s a challenge for the whole EV industry and also other sectors dependent on chips. Besides, it will only be a temporary setback.

Buy or not to buy?

It’s a tricky question as some analysts believe that Tesla has more room to fall further, while at the same time others forecast Tesla to skyrocket. For example, Wedbush's Dan Ives expects Tesla to reach $1000! Isn’t it too optimistic, what do you think?

As you may have noticed, there are more headwinds than tailwinds for now, but Tesla tends to rise no matter what. So when such a company as Tesla is at the local dips, it’s likely to attract buyers as it has many investors that believe in the company and it’s still the #1 electric vehicle producer. Let’s look at what the charts will tell us!

Tech analysis

Tesla has dropped out of the ascending channel. It’s approaching the psychological mark of $600.00. Since the RSI indicator is not yet below the 30.00 level, the stock may drop to this support level. However, the falling should stop at that point as the stock is already below the lower line of Bollinger Bands and the 200-day moving average just below $600 will be a strong barrier. When it reverses up, it may meet resistance levels at the 50-day moving average of $680.00 and late-April highs of $750.00.

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