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Is Tesla Worth $10?

Stocks started the week in the red, led lower by the tech-heavy Nasdaq’s drop of nearly 1.5%

The culprit? It appears the trade war is hitting semiconductors and other tech shares especially hard right now.

I mentioned yesterday the relative weakness in the semiconductor sector. These stocks continued to weigh on the market Monday. The VanEck Vectors Semiconductor ETF (NYSE:SMH) dropped almost 4% to close right at its 200-day moving average.

“Making matters worse for the sector this morning is that Morgan Stanley is recommending that investors reduce exposure,” Bespoke Investment Group noted early Monday morning. “This is sure to make what has already been a weak technical picture for the sector worse as the sector was already down nearly 13% from its late April high heading into today.”

SMH

Despite the quick pullback, semis have a good shot at bouncing as many of these stocks approach key support. I’m not quite ready to call a TKO on this trend just yet.

In fairness, the semi situation could be much worse. Just check out the Blue Apron train wreck…

Meal delivery upstart Blue Apron Holdings (NYSE:APRN) is marching toward oblivion once again this week after the company announced plans for a reverse stock split. APRN has struggled to maintain compliance with NYSE rules as shares can’t seem to stay above the required $1 level.

As you can probably imagine, Blue Apron’s chart’s not pretty. News of the planned reverse split triggered another round of selling Monday, dropping the stock more than 8% to close below 70 cents for the first time since December.

APRN

To be fair, smoke has been billowing from Blue Apron’s kitchen since the stock’s first day on the NYSE nearly two years ago. You might remember that management cut its IPO range buy a few bucks due to soft institutional demand. It finally landed on the NYSE at $10 per share — a big disappointment at the time.

When APRN first hit the market, I couldn’t quite wrap my head around why anyone would want to buy shares. But the story has unraveled much faster than I ever thought possible. Apron’s demise began to accelerate late last year when management announced fresh layoffs and plans to slash marketing spending. The stock’s now back in the gutter following a short-lived winter rally.

Will Blue Apron make it to 2020 without getting delisted? Judging by the price action over the past six months, I’m not so sure this stock will survive.

Speaking of dubious stocks, Tesla shares briefly broke below $200 for the first time since 2016.

For the first time in more than two years, Tesla Inc. (NASDAQ:TSLA) shares sank below $200 on Monday morning.

Aside from Tesla’s fundamental struggles with being a car company, everything from autopilot crashes to the trade war could be to blame for the stock’s fall from grace. Or maybe investors are finally fed up with CEO Elon Musk’s antics. Either way, this is one hell of a chart:

TSLA

When we last checked in on the embattled electric car manufacturer earlier this month, management had just filed for a $650 million stock offering. In a bizarre twist, Tesla shares rallied back toward $250 after the company admitted it desperately needed cash. Today, shares are set to tank at the open after a Morgan Stanley slashed its price target from $97 to $10, citing concerns over cash burn and electric car saturation, Bloomberg reports.

Although many of Tesla’s woes are self-inflicted, Elon continues to live the worry-free life on Twitter, posting updates about adding more games and hidden features to Tesla’s user interface.

Maybe he’ll wake up if TSLA drops into the double-digits. At the rate this stock is plummeting, we might not have much longer to wait for this $10 price target to become a reality.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Rude Awakening PRO and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing for 13 years. In 2018, Greg’s Rude Awakening PRO portfolio beat the S&P 500 by 14%.

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