That was fast.
Days ago, Tesla (TSLA) was one of the year’s top performers.
From a 2020 low of $421.71, the stock just hit an all-time high of $547. All thanks to news of its entrance into China and optimism with delivery figures.
The company recently said it delivered 112,000 vehicles in its latest quarter bringing the total vehicles delivered in 2019 to nearly 367,500 — a 50% jump year over year. Better, Tesla began deliveries of its Model 3 sedan in China and has ramped up production at its China facility to more than 1,000 vehicles per week, reported CNBC.
Unfortunately, it looks as if the party is over for TSLA – at least near-term.
All thanks to Morgan Stanley, which just downgraded the stock to an underweight rating (essentially a sell rating) – and raised its price target from $250 to $360.
“We are encouraged by Tesla’s execution and think it deserves to be among the world’s most valuable auto companies, and is perhaps the most important auto company in the world given its EV leadership,” they wrote, as quoted by Barron’s. “However, we think investors will be presented with more attractive opportunities to own the stock in the future.”
At the same time, Morgan Stanley does anticipate higher volumes in China, where TSLA has ramped things up much more quickly than anticipated.
In other words, they like the stock but don’t like the current valuation.
At the same time, shorts are piling up. As of Wednesday, shorts were up to nearly $14.5 billion, making TSLA one of the most shorted stocks at the moment, says Business Insider.
Technically, shares of TSLA are long overdue for a healthy pullback. It’s now over-extended on its upper Bollinger Band (2,20), and overbought on MACD, and Williams’ %R. From here, we could see a healthy pullback to prior support at $400 before we see higher highs.
Stay tuned for more on this story.
