
If Tesla (TSLA) Stock Drops Below $180, Sleeping Bears Will Awake
NEW YORK (TheStreet) -- Tesla Motors (TSLA) - Get Report has plenty of fans and detractors. The car's sleek appearance can turn heads and the company's price chart should also get your attention at this juncture. Despite the announcement of new models and production goals, shares of TSLA have been hit hard in recent weeks.
The four year chart of TSLA, above, has us looking closer at our heads up display. Over the past two years, rallies in TSLA have been unable to sustain themselves over the $270 level. On the downside, declines to $180 on TSLA have been bought. This $90 trading range could be a congestion or consolidation zone before another big rally, but with prices down to $210 recently, and below the 40-week Simple Moving Average, it is prudent to suggest that we may be witnessing a triple top reversal pattern.
A triple top is a major top reversal pattern with three roughly equal attempts to push a security higher. On the downside, prices hold a "neckline" until it is broken, signaling the completion of the top and the start of a downtrend. The time distance between the peaks should be at least a month and prices should decline at least 10% from the peak. TSLA fits this pattern so far, but we still need a breakdown below $180 to wake the sleeping bear.
TheStreet Ratings team rates TESLA MOTORS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its robust revenue growth -- not just in the most recent periods but in previous quarters as well. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 24.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- TESLA MOTORS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TESLA MOTORS INC reported poor results of -$2.36 versus -$0.71 in the prior year. This year, the market expects an improvement in earnings (-$0.79 versus -$2.36).
- In its most recent trading session, TSLA has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 31.91%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -19.29% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$159.52 million or 4356.99% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: TSLA









