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Tesla shares rebound on Monday, JP Morgan slashes price target on the stock as doubts over go-private plan increase

JP Morgan Chase reportedly cut its price target on Tesla Inc (TSLA) to $195 from $308 previously, as the bank cited a lack of funding required for Elon Musks plan to take the electric vehicle maker private, which he had announced in a tweet less than two weeks ago.

Tesla shares closed higher for the third time in the past nine trading sessions on NASDAQ on Monday. The stock went up 0.96% ($2.94) to $308.44, after touching an intraday low at $288.20, or a price level not seen since July 30th ($286.13).

Shares of Tesla Inc have retreated 0.93% so far in 2018 compared with a 15.24% gain for the underlying index, Nasdaq 100 (NDX).

In 2017, Tesla’s stock surged 45.70%, thus, it outperformed the Nasdaq 100, which registered a 31.52% return.

The US bank continued to value Teslas stock at “Underweight”.

“Our interpretation of subsequent events leads us to believe that funding was not secured for a going private transaction, nor was there any formal proposal,” JP Morgan analyst Ryan Brinkman wrote in a note to clients, cited by Reuters.

“Tesla does appear to be exploring a going private transaction, but we now believe that such a process appears much less developed than we had earlier presumed, suggesting formal incorporation into our valuation analysis seems premature at this time,” the analyst also noted.

Last week Teslas CEO Elon Musk announced that he was in negotiations with a Saudi sovereign wealth fund in relation with his plan to take the company private. However, sources with knowledge of the matter said over the weekend that the Public Investment Fund of Saudi Arabia was in negotiations to invest in Teslas rival – Lucid Motors Inc.

A term sheet has been drawn up by the PIF and Lucid Motors, according to which the fund could invest over $1 billion in the auto maker and acquire a majority stake. According to the sources, the fund would invest as much as $500 million in Lucid Motors initially, while subsequent cash transactions would be carried out in two stages that depend on the company achieving particular production targets.

The negotiations between Saudi Arabias PIF and Lucid Motors may not lead to an agreement, the sources also said.

According to CNN Money, the 25 analysts, offering 12-month forecasts regarding Tesla Inc’s stock price, have a median target of $312.40, with a high estimate of $530.00 and a low estimate of $179.00. The median estimate represents a 1.28% upside compared to the closing price of $308.44 on August 20th.

The same media also reported that 9 out of 27 surveyed investment analysts had rated Tesla Inc’s stock as “Hold”, while 8 – as “Buy”. On the other hand, 7 analysts had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, todays levels of importance for the Tesla stock are presented as follows:

R1 – $310.30
R2 – $312.16
R3 (Range Resistance – Sell) – $314.02
R4 (Long Breakout) – $319.61
R5 (Breakout Target 1) – $326.13
R6 (Breakout Target 2) – $330.17

S1 – $306.58
S2 – $304.72
S3 (Range Support – Buy) – $302.86
S4 (Short Breakout) – $297.28
S5 (Breakout Target 1) – $290.75
S6 (Breakout Target 2) – $286.71

By using the traditional method of calculation, the weekly levels of importance for Tesla Inc (TSLA) are presented as follows:

Central Pivot Point – $324.07
R1 – $344.62
R2 – $383.73
R3 – $404.28
R4 – $424.82

S1 – $284.96
S2 – $264.41
S3 – $225.30
S4 – $186.18

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