Tesla, Inc. (TSLA): Scrutinizing the Chart

Most of the investors recently have been curious over the performance of Tesla, Inc. (NASDAQ:TSLA) stock. Many experts agree that the truth about a stock is best reflected in the way it moves on the chart. For this stock, the chart has a lot to say about future performance.

How has the stock performed recently?

Tesla, Inc. (NASDAQ:TSLA) has been trading in a bearish manner, based on the relative positions of the stock’s 20 and 200 day moving averages. In the last month, the price of TSLA has increased +3.06%. Shares are now up over the past year, outperforming the broad market by NAN% and outperformed a peer group of similar companies by 19%. After the latest session, which saw the stock close at a price of $325.20, TSLA sits below its 52-week high.

Momentum indicators

Of course, these surface-level price movements don’t tell us much about the direction that TSLA may be headed in the future. To do this, analysts often study the speed and magnitude of a stock’s price movements with what are known as momentum indicators. The logic is that as a stock’s momentum slows, it may be nearing key support or resistance levels and possibly the end of a current trend. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for TSLA is 50.02%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 60.31%, tells a similar story, and suggests that TSLA currently trades in neutral territory.

What do the trading volumes reveal?

In addition to price, analysts use volume trends to predict future performance. The level of trading activity in a stock is often a good proxy for the level of interest and enthusiasm for the name within the investment community. A sudden increase in activity can be a sign that investors are trading in anticipation of a catalyst. Tesla, Inc. (TSLA) average trading volume of 5,766,165 during the past month is 12.9% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.

What do the analysts think?

TSLA is currently overvalued by 4.01% relative to the average 1-year price target of $312.65 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 3.00, which implies that analysts are generally neutral in their outlook for TSLA over the next year.

How risky is the stock?

No study on the valuation of a stock is complete without taking into account risk. When analyzing the systematic risk associated with a stock, analysts look at beta, which measures the stock’s volatility relative to the overall market.

Tesla, Inc. (NASDAQ:TSLA) has a beta of 0.94, compared to a beta of 1 for the market, which implies that the stock’s price movements are less extreme than the market as a whole. TSLA therefore has an below average level of market risk. During the past couple of weeks, TSLA average daily volatility was 31.50%, which is 1.42 percentage points lower than the average volatility over the past 100 days.

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