TSLA Stock Rises 2% in Pre-Market as Tesla May Face Lower Luxury Auto Demand

UTC by Steve Muchoki · 3 min read
TSLA Stock Rises 2% in Pre-Market as Tesla May Face Lower Luxury Auto Demand
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Tesla (TSLA) stock is up 1.9% in the pre-market. Meanwhile, it is expected that Tesla may face serious issues related to lower demand as high-income people opt to work remotely today.

Tesla Inc (NASDAQ: TSLA) stock rose 2.2% to 816.88 last week. Today in the pre-market, it added 1.90% to trade at $ 832.40. TSLA stock, which has been very volatile in 2020, has been trading very tightly in the past few weeks. Another positive sign is that the RS line for Tesla stock is right at record highs. Meanwhile, it is possible that Tesla will face serious issues dues to lower luxury auto demand.

Tesla stock has a handle buy point of $869.92. On Thursday, shares appeared to nudge past a downward-sloping trend line but then fell slightly Friday. Investors probably should wait for Tesla (TSLA) stock to clear at least $843.39 (just above the May 12 peak) or the traditional handle entry of $869.92. 

There is a wedge-like feel to the TSLA handle, so a short-term pullback could be healthy, whether to the 21-day moving average, below the May 13 low or even to near the May 1 low of $683.04. That would shake out some weak holders. But Tesla stock is going to do what it’s going to do. TSLA stock has a 97 Composite Rating.

With the company shares highly affected by speculative trading, in the past one year, they have climbed a total of 328.52% and added around 95.27% YTD. The shares have been riding on the Elon Musk’s tweets recently, with his ambitious leadership putting them on top of the coronavirus pandemic.

Tesla (TSLA) Stock Fundamental Analysis and Car Demand

Having reopened the Fremont factory in California recently, its business operation is expected to continue picking in the country and also globally. However, there exist challenges that the company must work on to remain competitive in the market.

Being a luxury electric automaker, the company heavily depends on the high-end income earners and a few middle-class people to buy its products. However, with the working lifestyle gradually changing to adapt to the coronavirus by working remotely, Tesla might get a few customers in the future.

On the brighter side, since it’s able to work on its battery and other components to make the end product cheaper, it may give the company a competitive edge with other auto carmakers.

It is reported that Tesla is losing market share in Europe, where electric vehicle competition is expanding rapidly.

Another challenge lies in the Chinese market where the company reported more than a 60% decline in its product demand. With the Chinese electric automakers repositioning themselves strategically to gain a market advantage over Tesla, it, therefore, raises the bar for Musk and his team to fight for its Asian market share.

Generally, even if the demand for Tesla products may fall in the future, it may remain on top of other automakers since it offers much more advanced tech.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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