Tesla- the next Google?!

One of the great stock stories in the US stock markets in the past 6-7 months is the rise of TESLA. This company designs, manufactures and sells electric cars and electric vehicle powertrain components. You can check out its website (here).

TESLA is a start-up and it has yet to report any profit. In fact, it had incurred net losses of USD154 million & USD254 million & USD396 million in FY2010, FY2011 & FY2012- not surprising. But what is surprising is how the share price just zoomed up to nearly USD195 in end September after it broke above the USD40 horizontal resistance in April this year.


Chart: TSLA's daily chart as at Oct 17, 2013  (Source: Stockcharts)

Yesterday, one of the top fund managers in US, Jeff Gundlach commented that there is something wrong with how TESLA and Ford and GM seem to be all rallying higher. Surely the success of TESLA (if it happens) would eat into the market share of Ford or GM. He felt that TESLA is a stock that has benefited from its 'cultish aspect'. Without making a single cent of profit, the company is now worth USD300 billion. For more, go to here.

Looking at Chart 1, we can see that there are signs of weakness in the stock. Its RSI broke the 50-mark (before recovering above it) and its MACD broke its horizontal line. Both are not confirmed sell signals but warning signs that all may not be so well for this stock. I believe if the share price were to breach the 50-day SMA line at USD168, the stock could tumble down sharply.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, TESLA or Ford or GM.