NEW YORK (TheStreet) -- Tesla Motors (TSLA) - Get Report shares are declining in early market trading on Monday, down 1.46% to $182.37, after CEO Elon Musk announced that the company was rethinking its strategy in China in an effort to boost struggling sales in the world's largest economy.
Amid claims of shoddy after-sales service and concerns about the range of the electric vehicles, sales of Tesla vehicles in China have failed to meet Musk's previous expectation of matching U.S. sales by as early as this year.
"We'll fix the China issue and be in pretty good shape probably in the middle of the year," Musk said following the release of the company's fourth quarter financial results in January, during which time Musk described China sales as "unexpectedly weak".
One of the biggest hurdles for sales in China has been what analyst have described as range anxiety, according to Bloomberg. Customers who previously had expressed interest in purchasing Teslas when the cars were first rolled out have reconsidered due to fears that charging stations in the country are too sparse and spread out to thin to make driving the electric vehicle practical.
Part of the new strategy involves getting software upgrades already available domestically to Chinese consumers, advertising the growth of the destination charging stations at hotels and malls that supplement the network of super charger stations around the country and convincing consumers that there are enough charging stations that they will not run out of a charge on the way to their destinations.
Real Money Pro'sTimothy Collins had this to say about Tesla in a blog today:
It may seem easy to see the Tesla daily chart is mired in bearish territory just by glancing at the price action, but there's more. Tesla's price seems to be at a possible breaking point. The stock has been stuck in a downtrending (bearish) channel since February as part of a larger move down. The shares tried to rally in February, but once again, bulls are being tested as Tesla sits right near January lows. The challenge for the bulls is even a bounce from here will likely be capped at $200, which acts not only as a psychological barrier but is also the top resistance of the price channel. While it is tough to short in the hole, a close under $185 opens up additional downside and a bounce into $200 looks like an attractive put buying entry with a stop in the $207 area.
If there is a bounce to come, I would prefer to wait for past signals that played out well. The best signals have been a combination of a Slow K (%K) bullishly crossing over the Slow D (%D) while near or under the oversold line and when the 13-period relative strength index is also oversold. Why try to catch the falling knife, when the floor has been shown to us several times in the recent past?
TheStreet Ratings team rates TESLA MOTORS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate TESLA MOTORS INC (TSLA) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, poor profit margins and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- You can view the full analysis from the report here: TSLA Ratings Report