Can Tesla Stock Race to New Highs?
Much to the bears’ dismay, Tesla (NASDAQ:TSLA) stock is back from the dead. TSLA stock has rallied from its June lows and is now up $160 per share or 90% from its lows. Man, that must be causing some serious anger among those who are sure TSLA will go bankrupt.
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TSLA Is a Battlegroud
Let’s look at the facts. The bears got to eat through the first half of 2019. Bulls have been feasting since. But at the end of the day, TSLA stock is…up 2% over the past 12 months.
That is, TSLA is basically flat over the last year. So while the bulls and bears go at each other’s throats over whether Tesla is worth $0 or trillions, the rest of us are looking at a stock that has hardly moved.
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Until its recent burst, Tesla stock price was relatively flat over the last five years, making the bull/bear debate seem even more senseless.
China, Cash and Deliveries
Tesla’s Q3 earnings report caused the latest jolt in TSLA stock. This stock is largely driven by headlines and momentum, meaning its technicals and investors’ sentiment drive the stock.
After the company’s latest report, sentiment towards TSLA is bullish. The company’s earnings per share of $1.91 per share smashed expectations, while its revenue of $6.3 billion declined 7.6% year-over-year and missed analysts’ average expectations by $180 million.
Debates have ensued — as they always do — over the quality of the report. But that’s when investors need to tune out all of that noise and follow the price. TSLA stock will indicate what’s going on, and, right now, the bulls are sprinting down the sidelines.
If the company can deliver another quarter of strong deliveries, high positive free cash flow, and high net income, the bullish momentum of the shares may continue . Tesla’s biggest issue has always been its consistency.
Cars are not an easy business, and TSLA’s struggles have highlighted that. But with the momentum of its financial results, a capital raise earlier in the year and its Shanghai battery factory coming online, Tesla stock could rise further.
Further, Tesla’s 2025 bonds are trading at their highest-ever levels. So for all those investors who believe the smartest people in the room are on the bond desk and not on the stock desk, that’s one more factor to consider.
Trading Tesla Stock
At this point, the story line is in favor of TSLA bulls, and so, too, are the charts. Tesla stock closed just under $300 in the wake of its earnings, but TSLA ripped over that mark on the next trading day.
Where could Tesla stock run to now?
TSLA initially topped out at the 23.6% retracement point near $331. After pulling back, Tesla stock carved out a nice bottom around $310, before exploding higher once more. The stock actually ran to new post-earnings highs and is currently holding up over the 23.6% retracement level.
In the short-term, bulls will want to see this level hold up as support. If TSLA stock falls below that level, the $310 level could be back on the table for possible support. Keep in mind the stock is technically overbought (as shown by the blue circle). And while TSLA stock can still keep rallying, its overbought status could make it more difficult for it to rise and it could make the subsequent decline more painful.
If TSLA stock goes over $341.50, it can continue to barge higher. If the stock can become less overbought over time without giving up too much of its recent gains, then it’s possible that the shares will rise towards $380-plus in the intermediate term.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities.
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