Tesla Sells Off Despite Strong Q3 Deliveries

Tesla Inc. (TSLA) fell more than 7% in Friday’s U.S session, closing at the weekly low, after quarterly delivery numbers failed to beat recently raised expectations. The company delivered 124K Model 3s and 139.3K total vehicles during the third quarter, slightly above consensus of 122K and 136K, respectively. However, CEO Elon Musk had primed expectations prior to the release, leaking metrics to industry publication Electrek that suggested even stronger results.

Musk Promotion Efforts Backfire

Musk’s attempts to manage investor expectations and stoke buying interest have backfired in recent weeks. In addition to Friday’s tumble, the stock tanked just one day after the highly anticipated 5-for-1 stock split at the end of August, trapping late-to-the-party shareholders in a 34% 5-day decline.  It dropped like a rock once again when the colorful CEO admitted the highly-touted ‘Battery Day’ on Sept. 23 would not feature a game-changing announcement.

Canaccord Genuity analyst Jed Dorsheimer agreed that Tesla results will come as a “material disappointment” to bulls, “effectively cementing a miss” to the 500K annual guidance. He also warned that Q4 guidance is now at risk, noting “current consensus of 480K for 2020 would put the Q4 bar at 161K deliveries. As we look at 161K for Q4 to meet Street, it would suggest delivery figures are likely to come down and thus a risk of lowering expectations generally across the board”.

Wall Street And Technical Outlook

Wall Street has grown extremely cautious about Tesla’s lofty stock price and high valuation, issuing a consensus ‘Hold’ rating comprised from 6 ‘Buy’, 14 ‘Hold’, and a phenomenal 10 ‘Sell’ recommendations. Price targets currently range from a low of $19 to a street-high $566 while the stock closed Friday’s session $109 above the median $302 target. This placement raises odds for a high-percentage decline if Oct. 21 earnings fail to exceed expectations.

Tesla posted an all-time high at 502 on the first trading day of September and rolled into a symmetrical triangle pattern that’s now carved two lower highs and one higher low. A selloff to 370 would reach range support once again, potentially triggering another upturn. However, the lows have narrowly-aligned with 50-day moving average support, warning that a breakdown would expose further downside into the 200-day moving average, now crossing the 240 level.

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