Stock of the day: Tesla

Earnings season is here and one of the big companies presenting earnings yesterday was Tesla. EPS was slightly better than expected (1.05 vs 1.03) but revenue disappointed: 21,45B vs 22,09B USD. The results were shown after hours, so on the chart, we still don’t see a reaction to this data. We’ll be able to see in the after hours of trading though, where Tesla shares are down around 6%.

Interestingly, this is all happening while Tesla is in a very interesting technical place. On the long-term chart, we do have a big Head and Shoulders pattern (yellow) with the price being currently on the neckline (black). In theory, a breakout of the neckline could bring us a proper, long-term sell signal. The sell signal, which is hard to believe in because it would mean a price decline way below 100 USD.

I will risk a view that most probably the neckline will be defended. Even if we do have a breakout, in the long-term it could happen to be a false one, meaning the price won’t drop as much as the H&S pattern would predict. As long as we stay above the blue horizontal area, the sentiment on Tesla still looks positive and so is my view on this company.