Is This Finally the Tesla Turnaround? Here’s What the Data Says
“It was the best of times, it was the worst of times…”
With apologies to Charles Dickens, his classic opening line from “A Tale of Two Cities” also describes the last five years for Tesla (TSLA) shareholders.
The first half was a party as the stock shot 2,500% higher, and the second half has been a long-lasting hangover. Itchy-finger short-term traders may have snagged profits on some of the quick upswings the last two-and-a-half years, but those who bought in late 2022 and have held on are licking their wounds.
But after TSLA hit a 52-week low on Monday, shares jumped 12% yesterday and added nearly 5% today in some bumpy overall trading.
Here’s the twist in the story: Buyers jumped into TSLA after bad quarterly results.
Sales fell 9% from last year, the biggest drop in 12 years. Earnings of $0.45 per share fell 12% short of estimates and shrank 47% from a year ago. Just three weeks ago, Tesla announced it delivered 14% fewer cars than analysts expected in the first quarter… and 9% fewer than the first quarter of 2023.
It’s a pretty bleak picture, and yet shares soared on big volume. That’s important. TSLA is already one of the most traded stocks in the world, averaging 100.6 million shares per day. That jumped 80% to 179.6 million yesterday, making it the most active stock by a wide margin.
The big move had nothing to do with Tesla’s numbers and everything to do with what management said. Namely, that Tesla will launch less expensive electric vehicles faster than expected, as in later this year or early 2025. The announcement also came after Reuters reported Tesla was scrapping plans to build an EV that cost under $30,000. That now looks inaccurate.
No official launch date was given, but CEO Elon Musk said the company will have more to say about these cheaper EVs when it reveals its self-driving robotaxi on Aug. 8.
If you’re wondering whether to buy TSLA, you won’t get much help from Wall Street analysts.
Bank of America said the announcement “revitalized the growth narrative.” Good.
But hold on a second. UBS said it was “cautious on [the] near-term viability” of autonomous driving, and bemoaned “limited clarity on what these ‘new vehicles’ could bring.” So much for that.
That’s why we turn to the data.
Wall Street’s Darling or Delinquent?
Quantitatively analyzing Tesla the company and TSLA shares brings us right back to where we started – it’s a tale of two stocks.
My system gives TSLA a Quantum Score of just 48.3 today, well out of my preferred buy zone of 70 to 85. And that’s almost 10 points higher than yesterday’s score of 39.7, which is stunningly low for a massively popular stock and one-time Wall Street darling.
Source: TradeSmith Finance and MAPsignals.com
If we drill down further, we see a huge and highly unusual spread between the fundamentals and the technicals.
One thing to note: That 75.0 Fundamental Score will almost certainly come down after the latest numbers make their way through the data feeds and into my system. But I don’t expect it to crater. Sales and earnings growth over the last few years have been solid, and while the latest numbers weren’t so good, the algorithms take into account much more than the latest quarterly results.
But that Technical Score was 14.7 before yesterday’s pop – tied for the lowest among the nearly 6,000 stocks analyzed by my system. Again, that’s staggeringly low. The score did nearly double to 29.4 overnight, but there isn’t much positive to point to among the technicals.
The special sauce in my system is its ability to track Big Money flows. These are the movements of the biggest investors on the planet – the buys and sells that most impact a stock’s price. And believe it or not, my system did not pick up a Big Money buy signal even with yesterday’s pop.
Source: MAPsignals.com
In fact, it’s been nearly a year since the last buy signal (green bars above). There was a patch of Big Money buying last June, but nothing since then. Just the opposite. I count 10 sell signals (red bars) since the middle of October, the most recent coming Monday when TSLA hit a 52-week low.
Qualitatively, Tesla’s plans for a more affordable EV and robotaxis make sense and could ignite the company’s next growth phase. Quantitatively, the data doesn’t indicate a high enough probability of higher prices right now to make it a buy.
Robotaxis would require Tesla to work out its well-publicized and at times tragic problems with its autonomous driving platform. And while a Tesla under $30,000 would likely sell well, EV sales in general are down.
The path forward may look promising, but it’s not guaranteed. And the timing will almost certainly be adjusted along the way, perhaps on multiple occasions. That’s just the nature of progress, and Elon Musk has been a bit rosy in past announcements.
It’s better to invest on what know, not what we hope will happen. Sure, you can sometimes hit it big that way, but the probability of success also drops dramatically.
There are other stocks right now with the quantitative firepower that provide better odds of making bigger gains in the coming months.
Like my latest stock recommendation in Quantum Edge Pro. Its Quantum Score is 74.1, right in our buy zone, and its fundamentals and technicals both also rate in the 70s. What’s more, it has seen 19 Big Money buy signals in the time TSLA saw 10 sell signals. (Click here to learn how you can access it today.)
The data may shift in the future, and TSLA may one day be a compelling buy again. But that day is not here yet, especially with stronger opportunities out there.
Talk soon,
Jason Bodner
Editor, Jason Bodner’s Power Trends
Disclosure: On the date of publication, Jason Bodner held a position in Tesla (TSLA), mentioned in this article.