IMPORTANT POINTS:
- Tesla has lost $100 billion in market capitalization following a disappointing third-quarter report.
- The RSI suggests that Tesla could be oversold, presenting a possible buying opportunity.
- Increasing competition, especially from Nio Inc, poses significant challenges for Tesla in the electric vehicle market.
Tesla Inc. (TSLA) has seen colossal losses in the stock market after revealing a rather discouraging third quarter (Q3) report on October 18 at the market close. This news has generated an intense debate about the future of the company and whether it is an opportunity for investors.
A detailed analysis of the figures
According to data obtained from YCharts on October 19, Tesla lost more than $100 billion in market capitalization from its weekly peak of $808.89 billion on October 17, to the current $680.28 billion in capitalization at the time of publication.
Additionally, TSLA is trading at $213.89 per share on Nasdaq, approaching a major support zone at $215 on the daily chart. Tesla stock’s ability to hold this zone will be crucial in determining its direction going forward.
On the other hand, TSLA’s Relative Strength Index (RSI) shows weakness for the stock at 30.32 points. If it crosses the 30-point line, it could suggest that Tesla Inc. could be oversold in the stock market. This could create a buying opportunity for those investors who are still confident in the company’s fundamentals.
Unraveling the third quarter report
In its third-quarter report, Tesla’s unadjusted net income for the quarter was $1.85 billion, while total profit fell approximately 22% year over year and the company missed key fundamental metrics.
One of the most striking points, however, was that the reported adjusted earnings per share (EPS) of 66 cents, missed the stock market estimate of 73 cents. Additionally, revenue was $23.35 billion, while analysts were projecting $24.1 billion. This was the first time Tesla missed EPS and revenue estimates since the second quarter of 2019.
Competition in the electric vehicle sector
Furthermore, competition is increasing in the Electric Vehicle (EV) sector. Chinese competitor Nio Inc (NIO) has set new milestones in meeting consumer demands. The company registers accelerated growth in the number of units delivered.
Taking all these factors into account, Tesla faces new challenges in an industry previously dominated by its products, and now has to fend off its competitors amid an adverse macroeconomy. However, TSLA could still offer good short-term buying opportunities if it maintains price support.
