Tesla is down after Q4 2021 earnings upbeat. Will it stay down?

on Jan 28, 2022
  • Tesla stock closed down 11.55% after Q4 2021 earnings.
  • The company reported a record $5.5 billion net profit in 2021 from $53.8 billion in revenue.
  • Wedbush analyst Daniel Ives assigns an outperform rating with a $1,400 target.

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A day when electric maker Tesla, Inc. (NASDAQ:TSLA) announced its financial results, its stock took a nosedive, falling up to 11.55% to trade at around $830. The stock fall happens amid a record $5.5 billion net profit for 2021, from total revenue of $53.8 billion.

The fourth-quarter net income also came at a record $2.343 billion, up from just $296 million in the prior year. Clearly, there was every reason for Tesla stock to rise after the strong earnings, but instead, investors chose to remain cautious.

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In additional comments, Tesla CEO Elon Musk said the company would prioritize deliveries over offering new vehicles this year. He said the company would invest in research and development for a humanoid robot and scale its driver assistance technology and Full Self-Driving.

Musk also said that the EV maker was not immune to the chip shortages that have hit the industry. This caught the attention of investors, who hoped for better guidance this year even as competition hots up in countries such as China. Still, Tesla has a lot to offer for long-term focused investors.

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Tesla to $780 looks likely after the recent slump

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Source – TradingView

From a technical point of view, $781 is the next potential low for Tesla after breaking below the consolidation zone. This is the next support level, and the stock could ride on the bearish move to touch the low.

The 50-day and 100-day moving averages provide resistance above, meaning that the stock could continue to face bearish pressure. Nonetheless, the RSI reading of 31 suggests that Tesla is entering the oversold level and could quickly correct to the upside after reaching the $781 support.

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Besides, long-term focused investors are bullish on the stock as Tesla remains in a viable market segment of electric vehicles. Wedbush analyst Daniel Ives expects the stock to outperform and reach the $1,400 level.

Deutsche Bank analyst Emmanuel Rosner also believes Tesla will outperform given its battery technology, product category, and manufacturing ability. 

Final thoughts

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Tesla stock presents a buying opportunity based on its strong fundamentals. However, the technical analysis shows that an entry at $781 is appropriate as this is the next support level for the stock after the recent decline.

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