Tesla Stock Set for Another Drop on Refund Rumors

Tesla will report earnings next Wednesday, Aug. 1

by Karee Venema

Published on Jul 23, 2018 at 9:15 AM

The shares of Tesla Inc (NASDAQ:TSLA) are bracing for a more than 3% drop out of the gate on reports the electric car maker is asking its suppliers for cash refunds so the company can become profitable. Ahead of Tesla's Aug. 1 earnings report, The Wall Street Journal cited a company memo that asked one of its suppliers for a "meaningful amount of money of its payments since 2016."

This premarket downside just echoes the car stock's recent technical troubles. Since topping out at a year-to-date high of $373.73 on June 18, TSLA has plunged 16%, based on last Friday's close at $313.58. And while the shares recently breached the key 200-day moving average, the could be at risk of closing below their 80-day moving average for the first time since early June, should today's expected price movement play out.

Analysts have been growing increasingly bearish on Tesla stock, but there's plenty of room for more negative notes. Of the 17 brokerages covering TSLA, six still maintain a "buy" or better rating.

TSLA stock could get hit with bigger headwinds should short sellers start ramping up their exposure again. Short interest fell 11.5% in the two most recent reporting periods to 34.59 million shares-- the fewest since early April. However, Tesla remains heavily shorted, considering the current level of short interest accounts for 27.6% of the equity's available float, and is just a chip-shot away from the May 1 record high of 39.09 million shares.

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