2024-02-01 23:03:00 ET
Ferrari (NYSE: RACE) and Tesla (NASDAQ: TSLA) have diverged as the automobile industry goes through major changes. Tesla shares have crashed by more than 50% from their peak and are already down by 37% from their highest point in 2023.
Tesla stock price death cross
Worse, as shown below, Tesla shares have formed a death cross pattern, where the 200-day and 50-day Exponential Moving Averages (EMA) makes a bearish crossover. In most cases, this is one of the most bearish signs in the market.
This death cross indicates that bears are taking charge as concerns about the EV industry rises. For example, used Tesla prices have plunged as Hertz has continued to dump thousands of vehicles in the market.
As I warned recently , there are concerns that China is flooding the market with vehicles, a move that will lead to weaker margins for companies like Tesla. For example, in their monthly reports, companies like Nio, Xpeng, and Li Auto announced that they will boost their production by double-digits this year.
Therefore, it is hard to see a catalyst for Tesla shares this year since the management has already warned of the industry’s slowdown. Tesla’s earnings have continued to disappo
TSLA stock has formed a death cross
Ferrari is firing on all cylinders
Ferrari, the fifth-biggest car company in the world, is firing on all cylinders as its sales booms. The company has taken a better approach in the ongoing EV transition than its peers. While the company has announced plans for EVs, it is mostly focusing on ICE vehicles that are popular with buyers.
Further, Ferrari seems to be having elevated demand for its vehicles as evidenced by its recent results. The company’s revenues jumped by 10% YoY in the last quarter to $1.66 billion as its lineup of vehicles continued seeing elevated demand. For example, the Purosangue has received strong reviews, with many buyers willing to pay a premium.
The strong financial results helped push Ferrari’s stock price to a record high on Thursday, giving it a market cap of more than $70 billion. The shares also surged after it was reported that Lewis Hamilton would decamp from Mercedes during the 2025 season.
Lewis is a big deal because of his success at Mercedes. However, I don’t think that him being part of the team will lead to any substantial sales at the company.
Looking forward, Ferrari, which is quite overvalued, has the momentum to continue soaring in the coming months. If this happens, the stock will likely jump to the key resistance at $200 in the near term.
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