Tesla shares suffered a pretty sharp drop on Thursday thanks to a mixed earnings report for the fourth quarter in addition to the resignation of its CFO. Shares of Tesla (NASDAQ: TSLA) sold off 6.4% on Thursday after the company reported a larger than expected loss of $0.69 per share when analysts were expecting around $0.42. Revenue was higher than expected at $2.28 billion which beat estimates of $2.2 billion. Analysts were mixed on the results of Tesla as well which may have added to the profit taking.
On the conference call the top brass at Tesla said that they are prioritizing cash preservation over growth after recently completing the acquisition of Solar City (NASDAQ: SCTY), and remember they are expanding like crazy. According to the report the company made $522 million in total capital expenditures for manufacturing of its model 3, to continue to develop the Gigafactory in Nevada and to expand customer support. The company expects the capital expenditures number to grow to $2.5 billion on the high end.
As for the technical traders they will argue that this decline is well over due. For the past 3 months Tesla has been in a straight line up with very little in the way of pullbacks. This is a classic technical pattern that shows a stock's price performance getting too far too fast. From the low set in December to the high set just a few days ago the move was well over 50% in just 72 days. With such an amazing move higher a pullback is a warm welcome for the short term trader that is looking to try and time a bounce.
For the longer term trader you really haven't noticed much growth out of Tesla in the past two years. Shares have been back and forth in a wide range. Technical traders will note that the recent high is also very near the highs of the last 2 years range and many would expect the pullback to continue. If it does not then technical traders will be calling for a breakout to all time highs.