Tesla stock price fades after earnings pop
Tesla’s Q1 earnings drove a hefty rally in the stock price, but the excitement has faded since then.
Tesla's stock jumped over 10% after its first quarter (Q1) earnings release, but the results were actually disappointing for many investors. Revenue declined 9% year-over-year (YoY), gross margins contracted to 17.4% from 19.3%, and earnings per share (EPS) plunged 53%. Most concerning was that Tesla burned cash with negative free cash flow in Q1.
However, investors seemed to look past the poor results based on optimism around Tesla's upcoming new product launches. Highlights included getting a first look at the Cybertruck "robotaxi" in August, as well as Tesla accelerating the timeline for launching more affordable EV models to as soon as late 2024.
The stock pop could be an overreaction driven by excitement about Tesla's future products rather than the current fundamentals. Whether it kicks off a new bull run likely depends on if Tesla can successfully execute on its ambitious new vehicle roadmap and maintain its lead in the EV space. But the disappointing Q1 metrics underscore the risks and challenges Tesla still faces in achieving that vision.
Tesla stock price – technical analysis
Many investors had hoped that the post-earnings bounce would mark the end of Tesla’s miserable performance in 2024.
That may well be the case, but in the short term May has not gone well for the stock price. It has dropped by almost 15% from its post-earnings high, and has dropped back below the 50-day simple moving average (SMA).
In addition, the price has dropped below the $180 area, which generally marked the highs of February, March and April.
Bulls will want to see a close back above $180 to clear this area, and suggest that a higher low has formed. Meanwhile, sellers will need a close below $160, as this will reinforce the ongoing bearish view.
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