Shares of the world's most widely followed electric vehicle company fell 3 percent in Wednesday intraday trading.
So should Tesla Motors Inc TSLA investors be nervous ahead of the Wednesday earnings announcement, or are their fears much ado about nothing?
That remains to be seen.
The Technicals
From a technical perspective, though, Telsa has exhibited extremely poor relative strength since making its all-time high on September 4 at $291.42. In fact, it's arguable that shares began their pullback even before the broader markets' mid-October selloff.
While the S&P 500 and its peers have rebounded with a vengeance to new all-time highs, Tesla failed to reach even $250.00 -- a far cry from its own all-time high. It has retreated nearly $15.00 to the $231 range before the earnings announcement.
Tweets
Despite booking a year-to-date gain of 53 percent, Tesla shares are almost flat over the past three months. In fact, much of the stock's upward movement can be (directly or indirectly) tied to the Twittersphere:
On October 1: As the issue reached its lowest level since making its all-time high, CEO Elon Musk tweeted “About time to unveil the D and something else," hinting at the later-revealed Model D. Shares rose 7 percent in the next five trading days, before falling 12.5 percent the following week.
On October 28: One day after WardsAuto.com reported Tesla sales were down 26 percent through September (versus 2013 sales), shares rallied $10.00 after Musk refuted the report and tweeted: “Article in @WSJ re Tesla sales are incorrect. September was a record high WW and up 65% year-over-year in North America."
Analyst Take
On September 25, after the issue made its all-time high, Morgan Stanley reiterated an Overweight rating on Tesla. In the report, analyst Adam Jonas noted: “[W]hen asked about Tesla's stock, Elon Musk admitted he felt the share price was a bit ahead of itself... [but added], We believe the shares are worth $320.”
Trader Take
Dennis Dick, CFA and co-host of Benzinga's PreMarket Prep, is taking note of the price action.
He recently commented: “Traders have been some of the high fliers off earnings season... Those same traders appear to be nervous in Tesla today, as the stock is down... totally ignoring the broad market rally."
Technically speaking, Dick also noted the potential head-and-shoulders top pattern developing on Tesla's chart: A June $240 left shoulder, a $280-$290 September head and a right shoulder near current levels.
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