Possible Tesla bounce good for a trade, but not an investment, says technical analyst

A potential rebound for defeated Tesla Inc. stock might be good for short-term traders, but it probably doesn’t bode well for a long-term investment, a widely followed technical analyst said in a Wednesday note.

“I have little interest in TSLA right now as an investment. It is overrated and run by a CEO who clearly has other priorities and who has effectively become public enemy number one for much of his potential customer base,” said Andrew Adams in a note for Saut Strategy, referring to Tesla TSLA,
-0.17%
Chief Executive Elon Musk.

“However, I don’t think there has ever been a time when sentiment on TSLA was worse and yesterday it essentially filled a gap from the end of 2020 around $136. Its 50-day moving average is up to $193, so there is room for a return to the average move even if the TSLA eventually falls more,” he wrote (see chart below).

Strategy Saut

Laws: Tesla shares close below $150 for the first time in more than two years as analysts say they can no longer ignore Elon Musk’s Twitter ‘nightmare’

Tesla shares rose 0.3% near $138 in afternoon trading, on track to snap a three-day losing streak. The company is planning another round of first-quarter layoffs and is instituting a hiring freeze, Electrek said Wednesday, citing a person with knowledge of the matter.

See: Tesla stock appears to be breaking its losing streak after reports of hiring freezes and layoff plans

The decision, the report noted, would follow broad growth for the company and a 61% decline for Tesla shares in the year to date. The stock has tumbled in recent months after Musk finally bought social media platform Twitter Inc. Controversy has followed Musk’s takeover, prompting criticism that he isn’t spending enough time looking after Tesla.

Tesla is one of the biggest year-to-date bears in the S&P 500 SPX,
+1.49%,
which is down nearly 19% over the same stretch.

Adams said one of his best trades of 2022 “was mentioning Tesla as short in September near its reaction high,” a call that was followed by “reader after reader” asking where they should consider buying again.

“The very fact that so many wanted to buy it gave me pause, but now I covered my short and lost yesterday [my] betting on the long side for just a very small trade,” he wrote. “

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