Tesla Inc (NASDAQ:TSLA) shares are trading lower on Tuesday. The company is facing renewed scrutiny over its stock valuation despite strong China sales data.
What To Know: Famed “Big Short” investor Michael Burry made it clear on Tuesday that while he recently published a sharp critique of Tesla in his Substack, he is not currently shorting the stock. Still, his fundamental view of the company remains skeptical.
On X, Burry pushed back against recent coverage from news outlets, saying they misread his critique.
“I never said I was short TSLA,” Burry said in the post.
Burry argued that Tesla’s valuation is “ridiculously overvalued” and being chipped away by what he calls “tragic algebra,” highlighted by a 3.6% annual shareholder dilution rate with no buybacks to balance it. He warned that this erosion is likely to continue, especially after shareholders approved Elon Musk‘s potential $1 trillion pay package.
Despite Burry’s comments, Tesla’s China-made EV sales climbed 9.9% in November year-over-year, according to Reuters. The company continues to face fierce competition in China and Europe, even as demand shows resilience.
According to the China Passenger Car Association, Tesla’s Shanghai-produced Model 3 and Model Y cars, along with the exports to Europe and other places, recorded a remarkable 41% increase in November compared to October. This was the most considerable year-over-year growth that the company had experienced in the last 14 months.
The increase came as Tesla introducing a longer-range rear-wheel-drive Model Y in China last month. Earlier launches of a longer-range Model 3 and the six-seat Model Y L contributed to this as they provided buyers with more options and thus helped to sustain the momentum.
Still, Tesla faces huge pressure from local competitors including BYD. Moreover, a new player in the electric vehicle sector, Xiaomi, has rapidly established itself as a formidable opponent with its SU7 sedan and YU7 SUV. The firm has outperformed its 350,000-vehicle sales target for the year.
Examining TSLA Stock: Tesla stock opened at $430.81 on Tuesday, reaching a high of $436.80 before declining to a low of $422.12 during the trading session.
Currently, Tesla is trading approximately 2.2% below its 50-day moving average, suggesting a short-term bearish trend. In contrast, it remains significantly above its 200-day moving average, which is approximately 24.6% higher, indicating a longer-term bullish sentiment that could provide support in the event of further declines.
The stock’s 52-week range of $214.25 to $488.53 highlights its substantial volatility and potential for price swings. The current price is closer to the lower end of this range, which may attract bargain hunters looking for entry points.
Key support levels to watch include the recent low of $422.12, which, if breached, could lead to further downside. Conversely, resistance is likely to be encountered around the $430 mark, where the stock previously found selling pressure.
TSLA Price Action: Tesla shares are down 1.03% at $425.70 at the time of publication on Tuesday, according to Benzinga Pro.
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Photo: courtesy of Tesla.
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