Tesla (NASDAQ: TSLA) stock price has continued crashing hard this year and the plot could thicken this week. It has plunged by over 40% this year, shedding billions of dollars in value, making it the worst-performing Magnificent 7 stock.
Tesla earnings aheadOther electric vehicle companies are not doing well either. Nio, the Chinese EV company, has dropped by over 58% this year while Mullen Automotive (MULM) and Canoo (GOEV) have dropped by over 51% this year. Nikola (NKLA) stock has fallen by more than 29% this year.
TSLA vs NIO vs MULN vs NKLA vs GOEV
The outlook for EV companies seems dire this week after Tesla spent the weekend cutting prices, signaling that the industry is still going through a meltdown. The company slashed prices across the board in the US, China, and Europe.
In the aftermath, other EV companies like Li Auto will likely respond by cutting prices as the price war escalates. Li Auto cut prices for its vehicles by between 6% and 7%. Other firms that could follow the same trend are Rivian, Lucid Motors, Nio, and VinFast.
This will also be a crucial week for Tesla as the company is set to publish its financial results for the first quarter. Analysts believe that the company’s performance continued to underperform, with the average revenue target being at $22.34 billion. If this happens, it will signal that the company’s revenue dropped from $23 billion a year earlier.
Investors also anticipate that the company’s performance was not good for two reasons. Its deliveries for the first quarter came in at 386,810 while the average selling price dropped between the two quarters.
Despite recent price cuts, Tesla is unlikely to avoid negative year-over-year growth for two consecutive quarters because it's difficult to match the 466,140 units delivered in Q2 last year.
It's rare for Tesla to report fewer deliveries in a quarter compared to the same quarter… pic.twitter.com/y84X0u8WY8
Also, these earnings are coming at a time when Tesla is recalling its cybertruck because of a pedal that could get stuck. This recall will likely add to the company’s operation costs.
Tesla’s earnings will have major implications for other EV companies like Rivian, Lucid Motors, Nio, Li Auto, Nikola, and Canoo. In most periods, these stocks tend to move in sync with Tesla when it publishes its financial results.
Their moves tend to be more pronounced than other EV companies like Rivian and Lucid. That explains why they have underperformed the company this year.
There are two potential scenarios to expect when Tesla publishes its financial results. First, the stock could rebound since its weakness has already been priced in by the market.
Tesla stock price technicals
The other scenario is where the results are worse than expected, pushing it much lower. Sadly, technicals point to this scenario. On the weekly chart above, we see that the stock is about to form a death cross pattern when the 200-week and 50-week moving averages cross each other.
The stock has also crashed below the important support level at $152.28, its lowest swing on April 23rd. Therefore, the outlook for the stock is bearish, with the next target point to watch being at $102.40, its lowest swing in 2023. This means that it could crash by over 31%.
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