The average US stock index closed lower on Thursday (20/10). The US30 index fell –0.30%; the US100 contracted -0.51% as Tesla plunged –6.65% by the end of the trading session, while the US500 closed –0.80% lower. The weakness in average stock prices has increased liquidity against the USD which was supported by a rise in the 10yr T-Note yield which rose to a fresh 14-year high of 4.178%.
The USDIndex on Thursday narrowed its losses with a slight decline of -0.10%. The index initially fell quite sharply, as it was weighed down by short-lived Pound gains after PM Liz Truss announced her resignation.
Tesla Inc. reported Q3 revenue of $21.45 billion, below market expectations of $21.96 billion. As a result, the share price slumped. The electric vehicle giant described the quarter as strong with record revenue, operating profit and cash flow.
Operating income rose to $3.7 billion in the quarter and operating margin reached 17.2%. However, the company said profitability was impacted by higher raw material, commodity, logistics and warranty costs along with a negative forex hit of $250 million. This was also compounded by the less efficient performance of its new factories in Berlin and Texas.
Automotive revenue reached $18.69 billion, a 55% increase from a year ago, while cost of revenue for Tesla’s core automotive business rose to $13.48 billion during the quarter, up from $10.15 billion during the second quarter, in line with the increase in automotive sales. Tesla reiterated its previous guidance, saying, over a multi-year horizon, it expects to achieve 50% annual growth in vehicle deliveries.
Deliveries of its semi-electric heavy trucks will begin in December, but no exact time was given for the start of production of its Cybertruck pickup, with the group saying only that it will be produced in Texas following the ramp-up of Model Y production there.
The company said that as shipment volumes reach significant levels in the final weeks of each quarter, transport capacity becomes expensive and difficult to secure leading to more vehicles in transit at the end of each quarter. It said it expects to smooth out logistics through the quarter will increase the cost per vehicle.
Technical Review
#Tesla’s share price since the August split (302.24) is still underperforming. Following this Q3 report, #Tesla’s price was trading at around 207.54 on Thursday, which translates to a decline of -31.2%. Sentiment over Elon Musk’s plan to buy Twitter, concerns over economic slowdown, surging inflation and rising interest rates contributed to #Tesla’s performance.
From a technical point of view, a further decline to the downside amidst the Fed’s rate hike expectations is not out of the question. June 2019 support as the bulls’ main defence is at 176.77 or about 14% of the current price. But a move above 228.64 minor resistance in the next few days could change the bias back to the upside to test 265.71 support which is now resistance. Alternatively, it is even possible that the company’s improved performance could lift the price up to the 302.24 limit.
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Ady Phangestu
Market Analyst – HF Educational Office – Indonesia
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