Video: Tesla shares flash red and could pull back. Albemarle, the lithium proxy is expected to report higher earnings

Tesla flashes red signals after a record rally; meaning some of its gains could be unwound 

Tesla was one of the weakest in mega caps on Monday, while suffering its biggest two-day fall since January, losing 6.1%. Tesla shares have been bouncing off their lows and are up 93% with investors hopeful the Fed will pause rate hikes. However, some investors have been trimming gains, with the Fed hinting it could keep rates higher for longer. However, Tesla’s bulls may argue a potential Fed pause could support higher earnings, while Tesla maintains its lofty production targets. Consensus believes Tesla’s 2023 revenue will grow 28% to a new record, with EBITDA expected to swell 20% to a new high, with 12.5% EPS growth. However, from a technical perspective, Tesla’s relative strength index (RSI) is showing the stock rally is slowing, with Tesla trading in so called overbought territory - a technical level that could signal a potential reversal. The last time Tesla was this overbought was in November 2021.

Lithium giant Albemarle reports earnings. Its results will be telling for the lithium sector's outlook  

This week, the world's biggest lithium company, Albemarle reports earnings. Given its size and scale - with it selling to most EV makers including - Toyota, Ford, Mercedes, GM, Hyundai, Kia, Nissan, Tesla and Renault – we think Albemarle will be a proxy for what we can expect from lithium companies' earnings. And its outlook could also guide us for what to expect this year from the lithium sector. Consensus expects operating profits to have improved and rise to $1.05 billion in the quarter. EBITDA is expected to grow to $1.22 billion, while net debt is expected to drop, with adjusted EPS forecast to grow to 8.19.

Click here to look at more stocks to watch across the metals sector this week. For a list of lithium stocks and EV metal stocks, refer to Saxo's Equity baskets under Research, Stocks. 

 
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