Shares in Tesla Motors, Inc. (NASDAQ: TSLA) dropped 2.9 percent in regular trading today, on volume almost 50 percent above average, after activist short-selling firm Citron Research tweeted that shares will fall to $100 by the end of 2016 — a level 46 percent below today’s closing price of $186.35.
Citron shorting $TSLA Supply AND demand problems should take down to $100 by years end. News flow all around does not look good for stock
— Citron Research (@CitronResearch) March 1, 2016
Buyers disappeared and sellers overcame TSLA shares, with the intra-day stock chart resembling a hockey stick; prices quickly printed a low of $182.70 before recovering somewhat and closing up 1.9 percent from the day’s bottom.
TSLA shares fell $2.35, or about 1.3 percent, in after-hours NASDAQ trade.
The sell-off in TSLA shares stood out against what was a strong rally by the general market. The Dow Jones Industrial Average (^DJI) finished the day up 348.58 points or 2.1 percent, while the NASDAQ Composite Index (^IXIC) gained 131.65 points or 2.9 percent. Trading volume on both the New York Stock Exchange (^TV.N) and the NASDAQ (^TV.O) was the highest of any of the past five trading sessions.
Investor’s Business Daily currently ranks TSLA shares with a composite rating of 22 (the maximum is 99) and notes that after finding a bottom after announcing earnings on February 10, shares rallied almost to the point of touching their 50-day moving average, before selling off on today’s negative comments from Citron.
Fox News contributor Gary Kaltbaum has noted that “Bear market rallies usually peter out in and around declining moving averages, mainly the 50 day and if not, the 200 day moving average.” Short sellers often use moving averages to help determine entries into stocks they believe are set to move lower.
With its full year- and fourth quarter-2015 financial results, Tesla reported a per share loss of $0.87, missing the Wall Street analyst consensus of a profit of $0.10 by 970 percent.
For the first quarter of 2016, analysts are expecting TSLA to report a loss of $0.42 per share. Just 90 days ago, the consensus was for a profit of $0.12 per share. Over the same period, the consensus for full year-2016 TSLA earnings per share has been lowered from $1.81 to $1.38, and the consensus for 2017; from $4.29 to $3.17.
Also potentially contributing the negative action seen in TSLA stock may be a walk-out staged by union tradespeople working on the Tesla Gigafactory near Sparks, Nevada, upset with the company’s use of subcontractors who hire out-of-state workers, as reported by the Associated Press via Yahoo Finance.
“They say it’s because there are not enough workers in state to fill the jobs, but we have all kinds of workers available. They simply are going out of state because they can pay them less money,” Russell James, with the Building and Construction Trades Council of Northern Nevada, was quoted. “Most of the guys from out of state probably have no health insurance and no pension benefits, so that alone could be a difference of $10 an hour even if you pay the same wages.”
Despite the weakness in the market for TSLA stock and weakening expectations, other highly ranked stocks have been described by Investor’s Business Daily as approaching “buy points.” Among the names are NIKE, Inc. (NYSE: NKE), O’Reilly Automotive Inc. (NASDAQ: ORLY), Tesla supplier NVIDIA Corporation (NASDAQ: NVDA), and Ryanair Holdings plc (NASDAQ: RYAAY). IBD recommends that investors buying using their published buy points cut losses at a maximum of 8 percent below purchase price, acknowledging that it is impossible to predict stock market movements with 100 percent accuracy.
IBD currently states that markets are in a “confirmed uptrend.”
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