Tesla (TSLA) hits its lowest share price since November 2020

Pick your poison if you are looking for reasons as to why the EV maker is hitting 2-year lows.   There are plenty of headlines in the news lately surrounding Telsa’s stock price as it moves to an intra-day low of 166.19 on Tuesday. Over the last few days, Tesla has issued recalls for hundreds of thousands of cars due to problems related to everything from rear taillights to airbags.  How about the problems in China?  Not only is Telsa dealing with the Covid issues still plaguing the country (just like everyone else), but it also has to deal with an increase in competition from locals as well, such as Nio. And what about Elon Musk?  First, he admitted that he sold TSLA shares to help raise cash to buy Twitter.  Second, some investors are concerned that Musk is putting too much of his time into running Twitter rather than where they feel it can be better spent, such as running Tesla.  In addition, Musk has told employees at Twitter that they need to work harder or they can leave.  Many have left, prompting a recall of essential employees as advertising dries up. Some even speculate that twitter may not be there when they wake up in the morning! 

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All of this, not to mention a bear market in the NASDAQ, has caused Tesla’s share price to fall from a split-adjusted high of 424.50 on November 4^th, 2021 to today’s low of 166.19.  This includes a selloff on the weekly timeframe during 8 of the last 10 weeks (including this week).  The last time TSLA was this low was just before breaking out into new high territory during the week of November 16^th, 2020.

Source: Tradingview, Stone X

On a daily timeframe, TSLAs share price has pierced through horizontal support at 167.50 (see weekly) to an intraday low of 166.19.  However, price has since bounced and is trading in positive territory for the day.  If price continues to move lower, the first support level is at the 161.8% Fibonacci extension from the lows of May 24^th to the highs of September 20^th, at 139.96.  Below there, price can fall to the bottom trendline of the channel TSLA has been in for the last year, near 131.75, then additional horizontal support from late October 2020 at 122.28.  However, notice that the RSI is making a higher low as price is making a lower low.  This is an indication that price may be ready to bounce.  In addition, TSLA has formed a descending wedge.  The expectation for a descending wedge is that price will break out to the top side of the formation and retrace 100%.  In this case the target is near 237.40.  However, if price is to get there, it must first pass through resistance at 200.82.  Above the target, resistance is at the gap opening of 257.50.

Source: Tradingview, Stone X

With recalls, worries about the impact of Covid in China, and the focus on Elon Musk at Twitter, Tesla shares have been selling off aggressively.  However, the stock price is at support, with a diverging RSI and a reversal formation (descending wedge).  Is TSLA ready to bounce?  If all the bad news is already priced in, the share price could be ready for a bounce towards 237.40!

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