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Tesla Shares Witness A Sinusoidal Trend

|Includes: Tesla, Inc. (TSLA)
Summary

Tesla shares seem to be gearing up post a fall of 8 per cent over last one year.

There seems to be an opportunity of buying the dip.

Tesla had announced to raise the weekly target in April to 6,000 by June.

Tesla Inc (NASDAQ:TSLA), has witnessed a rise in its share price by 1.48% as at May 23, 2018. With opinions from many experts on better than expected output from its Model 3 sedan amidst the negative sentiments, investors are coming back and evaluating any buying prospect. Further, the appeal of a ruling in New Jersey that bans the car maker from selling its luxury electric vehicles directly to consumers in the state, shows that Tesla is still heading up in moving the car industry. In a claim filed recently, Tesla said that the ruling last month by New Jersey's Motor Vehicle Commission was outdated and not competitive. It claimed that states were bowing down to the pressure of car dealers. According to Tesla's claim, if car dealers had to sell Tesla vehicles, then they would have to explain why electric cars are better than gas-powered cars, which would be a conflict of interest considering franchise car dealerships get most of their revenue from gas-powered vehicles. Mr. James Appleton, president of New Jersey's Coalition of Automotive Retailers, says that Tesla wants full control over the distribution of its cars, potentially eliminating all its competitors. He said that franchises promote competition, benefiting the consumer. This still baffles the investors in terms of the group’s outlook.

With regards to production, Tesla had announced to raise the weekly target in April to 6,000 by June. On the other hand, the electric car maker has cut down up to $14,000 of its Model X in China with the introduction of tariff cuts for imported automobiles.

Thus, different forces are pulling the stock up and down while the fight against Tesla looks to be rooted in fear as the company's cars seem to be going from a fad concept to a disruptive force in the auto market. Tesla's cars sell for $60,000 and up, but the company plans to develop its own lithium batteries, which should cut the price of its cars to around $30,000 or less, moving the cars into the mass market. While investors are looking for next leg of growth, the outlook for Tesla seems to be a little mixed one as they have not forgotten CEO Elon Musk’s remarks in the latest bizarre earnings conference call. On the other hand, the group is spearheading and overhauling the corporate structure. The recent view on its new model is also changing the dynamics while market earlier reacted upon the big flaws as highlighted in the consumer reports. It has been however, coming into picture that the group can benefit from various market opportunities over the next couple of months while short selling has prevailed up till now. It is also worth noting that the car maker group has performed well in the first production quarter of 2018 with about 35,000 vehicles being produced, and this somehow signifies that the group can cater to its lofty target of supplying vehicles over the coming years amidst the challenging environment. There is no harm in having some exposure with the risks kept in mind.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.