Tesla showed a record loss for the quarter on May 3, posting a loss of $709.6 million, the biggest in the company’s short history.
However, the performance wasn’t as bad as many analysts had predicted, with adjusted losses coming in at $3.35 a share compared with the $3.58 per share forecast. That didn’t stop the share price tanking by more than 5% however, which may be down to Elon Musk’s bizarre conference call with analysts following the result.
In a somewhat awkward call with Tesla shareholders and analysts, Musk argued that continued questions about the company’s profitability were “boring” and “dry” and went on to say “Really, the problem is like people get too focused on like what’s happening in the space of a few weeks or a few months, investing should not be focused on short-term things. You should be focused on long-term things.”
All this makes for interesting reading but what is really going on here? Is Musk making a deliberate attempt to make headlines that detract from the company’s underlying performance or is he genuinely getting rattled by Tesla continuing to miss its own production estimates and revenue targets? With the much-hyped Model Y not beginning production for another two years and the production of current models still not meeting the companies own target of 5000 per week there are worrying clouds forming above the Fremont, California-based tech giant.
So how can this be traded? Clearly, the news is bad for the stock which continues to fall in early trading. But this could be an overreaction by retail investors bailing out at the first sign of trouble. There is a clear line of resistance around the $2.80 level which should hold the price as it falls. If that level holds, then traders should look for a rebound of the price back towards $3.10. But if the $2.80 level gets broken it could fall to the next resistance level down at $2.52.
On a final note, Musk also said on his call “We have no interest in satisfying the desires of day traders like we couldn’t care less,” he insisted. “Please sell our stock and don’t buy it.” Well, he may have no desire to satisfy day traders but his recent outburst may do just that by providing a nice profit for astute traders who know their levels and place sensible trades accordingly. Stay aware and trade sensibly and you could do just that.