Tesla breaking below the key level of $100, is it just around the corner?

According to the Zhitong Finance and Economics APP, Tesla (TSLA.US) stock price has been falling for the sixth consecutive day, breaking through a key level on Friday, indicating that there may be more downside in the future.

Earlier, Tesla recalled 3,878 units of the 2024 Cybertruck due to the accelerator pedal getting stuck, leading to unintended acceleration and increased collision risks. This news may come as a shock to investors, although it is a normal occurrence in the automotive industry.

However, recalls are a normal part of the automotive business. In the past 12 months, top U.S. automakers have recalled approximately 30 million vehicles, with Tesla recalling around 2.6 million vehicles. Unless the repair costs are high or involve significant safety issues, recalls typically do not impact stock prices. Most recalls are made to ensure the safety of vehicles on the road as much as possible.

So, why is Tesla's stock price affected? This is likely because the number of recalled Cybertrucks is relatively small, at only 3,878 units. While this number may seem like good news, it could be all the vehicles the company has delivered so far.

Tesla began delivering the Cybertruck at the end of November last year. According to the recall notice, production was paused from then until mid-April to address the accelerator pedal issue, with Tesla delivering approximately 200 vehicles per week.

Currently, Tesla has not separately listed data for the Cybertruck in its delivery results, so investors and analysts can only try to track the situation through vehicle registration or registration data. These data suggest that there should be 5,000 to 6,000 vehicles on the road.

The difference between this number and the implied 3,878 Cybertrucks in the recall notice may seem small, but Wall Street estimates deliveries of the 2024 Cybertruck to be between 40,000 and 50,000 units. Tesla will have to significantly increase production to meet this target. The company's ultimate goal is to produce 250,000 Cybertrucks per year, or about 5,000 per week. CEO Musk has stated that this production level may be reached by 2025.

This week has been a tough one for Tesla shareholders. The stock price has been falling every day, with a total weekly decline of about 14%. The massive layoffs announced by the company on Monday triggered a sharp drop in stock price.

The company closed the week with a market capitalization of around $460 billion, lower than Exxon Mobil (XOM.US) with approximately $475 billion in market capitalization, the first time since January 2023. Exxon Mobil's stock price rose by 1.2% on Friday.

According to Katie Stockton, founder of Fairlead Strategies, Tesla's stock price has fallen by 41% year-to-date, breaking through the $149 technical support level, with the next significant support level at around $100.

The only thing that may prevent further stock price declines is Tesla's earnings report on Tuesday. The company is expected to report earnings of around 50 cents per share, lower than the 85 cents in the first quarter of 2023 However, more important than the financial report is Musk's view on Tesla's plan to accelerate growth again, as the first-quarter delivery volume is about 387,000 vehicles, a year-on-year decrease of nearly 9%. Stockton pointed out that if he cannot fulfill his promises, Tesla's fall to $100 is imminent