Tesla Motors Sales Declining, Shares Prices Should Too
Cheap oil prices are hammering Tesla Motors as the electric car maker has reported a slowing quarter with less than expected vehicles delivered and production of the new P85 four wheel drive model of the flagship car Tesla Model S causing supply issues for customers which are awaiting their new cars.
While the CEO of Tesla Motors Elon Musk said that the slowdown is temporary and inventory in the fourth quarter of 2014 should translate into better sales in Q1 2015, the road is not that clear for Tesla Motors. We are holding the opinion that every rally in the share price towards 197 should be treated as a put buying opportunity.
The results which Tesla published last night have been bad, the market expected $0.44 of earnings per share, and the automaker has instead delivered a -$0.13 loss. The revenue estimates have also been missed substantially by the company coming out at $956 million, which was about $273 million short.
The company has announced that it currently has 10,000 reservations for the Model S and about 20,000 for the Model X, however those deliveries are further down the line and the firm will need to ramp up its production capacity in order to catch up with demand.
Looking at the charts we see a scope for the price to drop towards $180 in the near future, this is why we would be buying daily puts around the $199-200 mark in order to play on the weakness of the shares of the automaker.
Tesla Motors has been trading lower in the aftermath of the announcement opening substantially lower and reaching to $193.30. The only scenario which reverses our bearish call is a rally above $205 in which case we will be placing bets to the upside.