Tesla (NASD: TSLA) may be the pioneer of EV’s, but rivals are closing in on its market share. This could spell trouble for the Tesla stock price.
Tesla shareholders have had another bumpy ride this week. The company has been making headlines for all the wrong reasons.
The Tesla stock price finished the day lower by -$18.78 (-3.01%), its third straight day of declines.
The Securities and Exchange Commission (SEC) has rebuked the automaker for failing to uphold a court order regarding CEO Elon Musk’s social media posts. Under the ruling, any of Musk’s public communications concerning Tesla would require pre-approval by the firm’s lawyers.
The securities watchdog claimed that since 2019, the firm has twice failed to enforce this policy.
Additionally, yesterday the company revealed plans to recall 5,974 vehicles over safety concerns. The voluntary recall cites concerns over loose brake caliper bolts in some recently made Model 3 and Model Y cars.
Competition Is Closing The Gap
Appearing on CNBC, former Ford CEO Mark Fields gave his assessment of the challenges facing Tesla.
The biggest concern for Tesla shareholders is its declining market share. Credit Suisse estimates the carmaker’s market share declined from 29% in March to 11% in April.
Field suggested that Tesla could become a victim of its own success, saying:
“One of the many things he did is he pushed the industry toward taking EV seriously,” Fields said of Musk, the chief executive of Tesla. “He has real competition now, and that’s why you’re seeing some of their share in some of the major markets under a lot of pressure.”
Tesla Price Outlook
The daily chart shows that Tesla broke below an important uptrend at $653.00 on the 10th of May. The trend, which had been in place since June 2020, had been a strong area of support.
This technical break triggered follow-through selling, taking the Tesla stock price -8% lower to $546.98.
However, the stock quickly reversed the decline as it approached the support of the 5th of March low at $539.49. The bounce ran out of steam at $635.59 before again turning lower.
Recent developments are likely to weigh on the Tesla stock price. The obvious downside target would be the $539.38 to $546.98 range.
However, if the price closes above the recent high of $635.59, it would indicate the momentum has turned higher, canceling the bearish outlook.