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Tesla: A Good Option to Invest

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

Not so long ago, people only had landline phones that you couldn’t take anywhere, which now looks very inconvenient to modern people. Then, mobile phones appeared, and while you can take them anywhere, you must not forget to charge them regularly. However, charging your mobile has already become as usual as, for example, brushing your teeth.

When it comes to automobiles, modern fuel cars are like landline phones, as you can’t go anywhere without fueling them at a gas station, spending your time and money and planning your day depending on how much fuel you’ve got in your car tank. Electric cars are certainly cars of the future, and charging them would be something modern people are already much used to, as natural as fueling them now. It’s not the question of how much crude oil we still have on Earth; the point is that the progress is moving forward, and combustion engines, which are complex and expensive to maintain, will sooner or later become obsolete. Electric cars, where you don’t have to constantly watch how much engine oil or coolant remains inside, are about to replace the traditional fuel cars.

Tesla, a company founded in 2003, is by far the leader in electric cars production. One of its founders is the famous Elon Musk, an engineer and inventor.

Tesla presented its first electric car concept called Tesla Model S on March 26, 2009, in Hawthorne, CA. On June 22, 2012, after all R&D was completed, it was launched in the market and cost $112,000.

A few months later, the second prototype came in: this time, it was a crossover, Tesla Model X. According to Musk, Model X serial production would start in 2013, and the car would be available in late 2014. These plans proved to be too optimistic, though.

The supply start date was only announced in February 2014, but then postponed to Q2 and Q3 2015, and it fact the first supply was completed In September 2015. By the end of Q3, only 6 Model X cars were sold, each for $80,000.

In 2016, a new car, Tesla Model 3, was announced, and the sales were scheduled for the same year, but then the start date was postponed to 2017. The first Model 3 was actually sold in June 2017, at $35,000.

Since the first model sales start and up to now, the company has been unable to reach any net profit, with all earnings reports showing losses. The company was on the verge of bankruptcy as long ago as in 2008, and only a NASA contract saved it.

Perhaps the famous April 1 joke posted then by Musk was based on this very event.

However, it’s all quite different now.

Looking at the financial indicators of the company over the last 4 years, one can easily see where those losses come from. In 2014, Tesla invested $464M on R&D, while in 2015 they invested $717M, in 2016, $834M, and, finally, in 2017, the R&D cost Tesla $1.378B.

The losses were growing in proportion, but were cut in 2016 thanks to Model X sales. In 2018, the same may occur, as Model 3 is going to be quite popular, so the company may even start receiving profits.

Before 2015, the revenue came from a single model, which was Model S. In 2015, 50,446 cars were sold, with the total gross income of $5.649B.

In 2016, they started to sell Model X, which boosted the total year revenue to $7.728B.

If the company did not invest so much into R&D, perhaps, Tesla Inc. reports would now look far better than they are, but this would not last long, as the competition is also doing something.

When Model S sales started, it cost $112,000, while the average US citizen monthly income was $4,121. While not everyone could afford such a car, the sales went on rising, as Model S targeted mostly the luxury segment.

The next model cost $30,000 less, but was still inaccessible for an average consumer. This is why Tesla decided to release Model 3 at $35,000, much cheaper than the previous models. However, a bad surprise was expecting the company afterwards.

When Model 3 was presented, people could start applying for it with a deposit of just $1,000. By the end of the day, there were already 180,000 applications; three days later, the number already reached 272,000, and by May 2016, it went on rising to reach 373,000.

However, this only led to more expenses, as the company had to upgrade its production infrastructure in order to meet all those applications (the number of those exceeded the total number of cars sold since start).

When Tesla allowed its customers to apply for the new model, its production capacity was just 120 cars per week, while in order to meet all the needs Tesla had to boost it by 60 times, to 7,200 per week. Elon Musk is a go-getter, but this was crazy even for him.

Both investors and customers are already used to Musk not fulfilling his promises on time; this already happened with both Model S and Model X, where the supply date was postponed multiple times. It has not changed much now. By the end of Q1, Musk promised to reach 2,500 cars per week, but in fact was only able to boost it to 1,987. After breaking this promise, Musk said he was going to get 5,000 Model 3 cars per week by the end of Q2, and, curiously enough, this target was reached, according to the report as of July 2.

This news made the stock price go up, but right at the end of the trading session it was again down by 2.3%, as many investors just did not believe the report was true.

With the past experience of Musk’s promises being quite negative, Bloomberg developed an online tool where everyone can track the Model 3 production process by VIN. The news agency sends a request to the National Highway Traffic Safety Administration (NHTSA) website which sends a response on the number of VIN’s registered for Model 3.

However, car manufacturers usually register VIN’s for the whole batch, so the values Bloomberg gets may be a bit higher than they in fact are. Still, according to these stats, the company reached 4,395 cars per week by July 2.

So, in fact, Musk did not fulfill his promise again, and the market reaction was of course negative. However, the key point here is not fulfilling promises but the overall progress that was made over such a short period of time. Just 6 months ago, Tesla produced around 200 Model 3 cars per week, while now this figure is over 4,000. Tesla market cap is already higher than the one of Ford Motor Company and nearly in line with that of General Motors, while those too have over 100 years of experience in car production and sales.

If Tesla is able to maintain the same progress as before, it will produce over 52,000 Model 3 cars by late Q3, which will lead to good Q3 and Q4 reports, while all negative effects of the trade war against China will be void.

Besides, if we also take Model S and Model X sales into account, chances for good reports get even higher.

Reaching 5,000 cars per week is a very difficult task: Tesla even had to place its new assembly line in a tent.

This GA4 (general assembly) allowed the company to boost the production by 20%, and it actually proved to be one of the key decisions.

Meanwhile, Musk says GA3 will be well enough to maintain the production capacity at 5,000 cars per week, while GA4 will help to reach the further target of 6,000 cars. With Tesla products being in demand, investors can be quite optimistic regarding the future of the company and invest more, although they do have some risks.

Tesla is now a leading electric cars producer with relatively accessible prices, but the competition are also looking towards electric car production, which may of course shrink the demand. Other risks include emergencies coming from the autopilot mode Tesla is quite fond of. There is no law regulating the driver responsibility in such cases yet, so the company has to face claims against itself, which lead to Tesla recommending using autopilot only as an additional feature that does not allow the driver to stop watching the road.

Doug Field, a talented engineer, leaving the company after working with it for 5 years is also an important negative factor. Elon Musk says this should not have any influence on the indicators coming in the following quarters, or on the new Tesla cars production.

Technically, there is a clear ascending trend on W1, with the price using the 200-day SMA as a support and constantly bouncing off it. The price has also managed to stay above $300, which may help it go further up, too.

There is no MACD divergence that could stop this growth for now.

Just like before, Tesla looks like a very good option for an investment. Elon Musk may set too ambitious goals, but he achieves them sooner or later. The demand for Model 3 still exceeds the production capacities, with over 400,000 cars pre-ordered, but this will also allow the company to develop new models. As such, the 40-ton truck, Tesla Semi, was already announced to the public in November 2017, and its serial production is scheduled for 2019.

According to some sources, there have already been 1,000 pre-orders, with the deposit increased from $5,000 to $20,000.

Thus, Tesla may become the first company to produce an electric truck in 2019.

 

Disclaimer

Any forecasts contained herein are based on the authors’ particular opinion. This analysis may not be treated as trading advice. RoboMarkets shall not be held liable for trading results based on recommendations and reviews contained herein.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 23 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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Altcoins

GBP Price Prediction: British Pound Jumps on Growing Backing for PM May’s Brexit Deal Ahead of Vote

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  • GBP catches a bid across the board as Prime Minister Theresa May gains ERG support.
  • Despite session gains, GBP/USD technically has vulnerabilities to downside risks, given rising channel formation.

GBP Bulls Awaken

The British pound (GBP) saw a decent jump to the upside on Monday, after an initially very choppy directionless start to the session. The buying swooping into GBP/USD came on the back of a growing number of ministers set to back Prime Minister Theresa May. Specifically, attention was grabbed after closely followed political watcher Robert Peston tweeted that “influential Tory Brexiter MP tells me he and his ERG Brexiter colleagues will be voting with Theresa May and the government all day tomorrow”. This is significant as the ERG is a very influential Brexit research group, which was previously plotting ways to oust PM May.

GBP/USD jumped to its highest level seen since 22nd November. The pair had seen an initial spike of 85 pips to the upside. Gains were capped however by a known strong area of supply; this can be seen tracking from 1.2870 up to 1.2930. The price has not been above here since 15th November 2018, and the bulls having faltered here on several occasions attempting to move above. Should GBP/USD manage to move above this zone, it would be a very strong signal that it is out of the bear market. Technically, this would be largely attractive for inviting further buyers to come in.

A detailed analysis of the upcoming Brexit vote can be viewed here: This Tuesday Will Be Zero Hour For the British Pound

Price Remains Confined Within Channel

GBP/USD daily chart. Price action remains within the confinements of a rising channel.

Another key technical observation is an ascending channel formation, which can be viewed via the daily chart. The GBP/USD pair has been moving within this since 12th December 2018, having gained over 400 pips since it took shape. The daily candle today briefly spiked above the upper tracking trend line of the pattern. However, the price was squeezed back within the confinements of this. Touted profit-taking kicked in towards the close of the European markets. This is not too surprising, as participants maintain an element of caution heading into the high-profile vote.

Given the nature of the above-described formation, should it play out to the textbook, vulnerabilities still point to a breakout south. This move would be heavily assisted should the British Prime Minister lose the meaningful vote on Tuesday. In terms of key levels to note, to the upside, a break above the 1.2930 supply zone will invite large buying pressure. To the downside, a breach of 1.2650, the lower support of the channel, will open flood gates to selling.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 106 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Crypto Update: 5 Altcoins to Watch This Week

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Just as it appeared that the crypto market was finally finding its footing, Bitcoin (BTC/USD) suddenly crashed hard last week. The bearish price action made a lot of investors jittery. Consequently, many participants either took profits or cut their losses on their altcoins positions. This drove numerous altcoins back to their support areas.

Last week’s price drop was a gentle reminder that we are still in a bear market. That’s why this week, we look at coins that are showing signs of strength while trading near firm support levels. Here are the five altcoins to watch this week.

Ethereum (ETH/BTC)

Ethereum corrected right after tapping the 200-day moving average. At that point, the market was showing signs of bullish exhaustion. You can see a bearish divergence on the daily RSI. Plus, volume was weakening while the price kept rising. Those who saw the writings on the wall managed to take profits at the top.

Daily chart of ETH/BTC

The good news is that Ethereum has an opportunity to keep its bullish momentum intact. Defending support of 0.03157 would enable the market to establish a bullish higher low setup. Bulls have a very good chance to preserve the support because both the 50-day MA and the 100-day MA are crawling around that level. They will act as additional support levels to help Ethereum stay above 0.03157.

Should bulls fail to defend 0.03157, the market’s sentiment will likely turn from slightly bullish to neutral. We can then expect Ethereum to drop back down to 0.026746.

Binance Coin (BNB/BTC)

Binance Coin refuses to follow the footsteps of Bitcoin. Even though its market structure closely resembled that of Bitcoin’s, the results were different. After apparently breaking down from a descending triangle in November 2018, Binance Coin rose from the dead and reclaimed support of 0.0014 in December.

The fakeout attracted bulls who were staying on the sidelines. As a result, Binance Coin took out the diagonal resistance of the triangle.

Daily chart of BNB/BTC

With the diagonal resistance out of the picture, BNB/BTC appears to have regained its bullish tone. If you’re looking to place long positions in the market, you might want to be patient and buy as close to 0.00146 as possible. That’s where both the 50-day moving average and the 100-day moving average are crawling.

Invalidation of this view comes if BNB/BTC trades below 0.0014.

NEM (XEM/BTC)

NEM’s corrective period may be finally coming to an end. While the market did breach the initial support of 0.0000176, it looks like it is establishing a new base at 0.00001544.

Daily chart of NEM/BTC

If market participants can keep XEM/BTC above 0.00001544, it will send a strong message that the NEM remains bullish. After all, the market would have just established its first pair of a higher high and a higher low in months.

On the other hand, if XEM/BTC goes below 0.00001544, the sentiment will likely shift from bullish to neutral.

0x (ZRX/BTC)

While 0x remains in a downtrend, there might be an opportunity to bottom-pick the market. With 0x creating a falling wedge on the daily chart as it approaches key support area of 0.000073, it might be possible to profit from a dead-cat bounce. Should ZRX/BTC break out from the falling wedge, the initial target is 0.0001.

Daily chart of ZRX/BTC

Keep in mind that 0x is still in a downtrend so have tight stop losses if you’re planning to take on this trade.

Bitcoin Gold (BTG/BTC)

Bitcoin Gold appears to be establishing a new base at 0.0033 support. Market participants have been accumulating positions around this area for over a month. If bulls can hang on for another week or so, Bitcoin Gold may just establish a bullish higher low. This will enable the market to trend higher.

Daily chart of BTG/BTC

A bullish higher low setup might inspire bulls to tap resistance of 0.005564. Otherwise, Bitcoin Gold might revisit lows of 0.00256.

Bottom Line

Last week’s crash has driven many altcoins near key support areas. Nevertheless, this gives us a chance to look at coins that are showing signs of strength and are trading near key support areas. There’s a lot of uncertainty going on in the market so make sure to place tight stop losses if you’re planning to enter any trade.

 

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.8 stars on average, based on 308 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Crypto Update: Coins Hit New Lows But Bearish Momentum Weakens

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The cryptocurrency segment continues to be in control of sellers, with the major coins hitting multi-week lows over the weekend. On a positive note, the momentum of the latest sell-off has been weak, and although several top coins violated key support levels, like Bitcoin, Litecoin, and Ethereum, the breakdown didn’t lead to severe losses.

That said, the short-term downtrend remains dominant and given the still bearish long-term picture, traders and investors still shouldn’t enter positions here, but a failed breakdown pattern could mean that the counter-trend rally is still intact. Correlations remain very high in the segment, confirming the bearish environment, and we would need more technical strength to consider new positions in the top coins.

ETH/USD, 4-Hour Chart Analysis

Ethereum plunged below the $120 support as well, continuing the short-term downtrend, and the previously leading coin still struggles to retain its relative strength. While failed break-out pattern remains a possibility here, bearish risks are still high, and test of the bear market lows still seems likely in the coming months.

Bulls should be looking for a quick recovery above the $130 level, but barring that, the coin will remain on sell signals on both time-frames in our trend model. Further support below $120 is found between $95 and $100, while resistance is ahead at $160 and near $180.

BTC/USD, 4-Hour Chart Analysis

Bitcoin broke below the key $3600 level amid the broad dip, but the coin didn’t gather bearish momentum, and it remains within striking distance of the resistance zone. BTC is still on a neutral short-term signal thanks to its relative stability, and a recovery above $3850 would be a positive sign for bulls that could re-trigger a buy short-term buy signal.

For now, traders and investors still shouldn’t enter positions here, considering the hostile long-term setup, with a test of the bear market lows still being likely. Key long-term support is found near the $3000 level, with further another weaker zone near $3250, and with resistance ahead between $4000 and $4050, and $4450.

Altcoins Testing Key Levels

LTC/USD, 4-Hour Chart Analysis

Litecoin violated the $30-$30.50 support zone, but it remains close to the lower end of that range and the momentum of the move hasn’t been disastrous. That said, the coin is still on clear sell signals on both time-frames, but further signs of strength could mean that the broader counter-trend move will resume. The $30-$30.50 zone remains in the center of attention, with strong resistance ahead near $34.50, $38, and $44 and with further support found near $26 and $23.

XRP/USDT, 4-Hour Chart Analysis

Despite its recent technical weakness and the fact that it fell below the $0.32 support level, Ripple held up well since yesterday’s plunge, and that is a positive sign for the whole segment, even though the coin is in downtrends on all time-frames. The $0.30 support and the $0.3550 resistance levels could be in play in the coming week, but for now, traders and investors should still stay away from XRP, with further resistance ahead near $0.3750 and in the key long-term zone between $0.42 and $0.46.

IOT/USD, 4-Hour Chart Analysis

IOTA, which has been one of the leaders of the counter-trend move also failed to hold up above the $0.3150 and $0.30 levels, and until we see signs of technical strength, the coin remains on sell signals on all time-frames in our trend model. A move to the support zone near $0.24 could be ahead, while a quick recovery above $0.3150 could lead to the formation of a bear-trap pattern. Further resistance is ahead near $0.35, while key support is found near $0.20.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 440 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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