Why I'm not holding Tesla Tesla was dropping! I got in at around 220. However, within three weeks, I sold for a small profit.
BUT, why did I sell? This is why I'm not holding NASDAQ:TSLA
It's time to buy!
From a technical and historical point of view, buying Tesla right now makes perfect sense. The stock has a history of making significant price gains, is currently oversold, and is testing key support areas, such as the monthly 50 SMA.
A trader or investor who is 100% technical-based, this stock looks like a dream.
However, all the hype hits the floor when the fundamentals are considered...
Meh...
✔ The company has been increasing sales and cash year-on-year until recently
✔ Tesla has plenty of cash and assets. A simple acid test ratio shows liabilities vs. assets around 1:2.
❌ The issue is profit. Both gross and net profit margins have been falling year-on-year. The net profit margin is down from 15% two years ago to 7% last year.
❌ Worse, the current forecasts predict decreased sales and other key financials.
Poor and worsening financials are a clear red flag when buying stocks. Stay away. No matter how appealing the price looks.
Don't get me wrong, I don't think Tesla is doomed, and it may still yield returns. However, I would not be surprised if the stock consolidates or moves lower from here. For me, Tesla is not the significant buy it once was.
