Tesla Inc Stock Is a “Sell” Now, but Don't Give up All Hope Yet

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Throughout the time that I’ve been covering Tesla Inc. (NASDAQ:TSLA), the calls seem to be straightforward. Not only has the TSLA stock price soared in recent years, the bullishness is justified. CEO Elon Musk is a genius, constantly pushing boundaries and paving the way for the technology of tomorrow. That he’s so young implies that we’re going to see plenty of Tesla-generated news.

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Yet despite TSLA stock gaining slightly over 50% this year, investors are right to be worried. Between August through the middle of October, shares did virtually nothing. Over the past few days, TSLA shed nearly 11% of value in the markets. Halloween came early for Tesla, with the share price barely straddling its 200 day moving average.

While I still believe that Tesla is one of the companies of the future, you must always respect the markets. Here, the signals for the TSLA stock price are pretty obvious.

As previously mentioned, shares were moving sideways for a few months, making it extremely difficult for analysts to call. But with TSLA moving so firmly downward, the next few sessions will be critical.

Although the company has come back from sharp corrections before (see the first quarter of 2016), I’d wait out this present bearish trend. Investors are reacting poorly to the TSLA stock price failing to breach the $390 level twice this year; once in late June and the other in mid-September. Under such circumstances, it’s probably better to wait before buying back in.

Model 3 Problems a Headwind for TSLA stock

But when will that buyback period occur? I have to caution readers that bullish investors may need to be more patient than they anticipate. As our own Will Ashworth stated earlier this year, a $1,000 TSLA stock price is within the realm of possibility. Its market capitalization already exceeds Ford Motor Company (NYSE:F) and is steadily approaching General Motors Company (NYSE:GM). Better yet, Tesla has the kind of social cache that Ford and GM lack.

However, in order for TSLA stock to hit this lofty target, Tesla has to move its production line. That’s been a big question considering the ambiguity surrounding the upcoming Model 3, an event that inspired famed fund manager David Einhorn’s short position. Ashworth writes:

“In August I acknowledged Einhorn’s short, concluding my article by suggesting that Tesla’s stock would be overvalued if it doesn’t hit monthly production of 20,000 Model 3s by the end of the year.”

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