By Tesla stock is experiencing a significant surge without any noticeable catalyst. While there hasn’t been a big news event, various factors have contributed to this upward movement.
Stock Performance
At midday on Monday, Tesla’s stock had risen by nearly 5% to reach $224.75. In comparison, the S&P 500 and Nasdaq Composite remained relatively stable.
It is worth noting that the stock price has increased by approximately $15 since closing on Thursday. This recovery follows a drop of 5.5% caused by an unfavorable rating and price target set by HSBC analyst Michael Tyndall.
Possible Factors
Several factors could be influencing the current upward trend of Tesla’s stock. One significant factor is the rebound from the previous drop. Additionally, some tangible developments have caught investors’ attention.
For instance, the Financial Times recently reported that India is deliberating on reducing tariffs for Tesla electric vehicles (EVs). Although this would make EVs more affordable for Indian consumers, it is crucial to consider that the Indian car market is relatively small compared to other regions.
In 2022, India sold approximately 16 million two- and three-wheeled vehicles, while selling fewer than four million four-wheeled passenger vehicles. Moreover, many new vehicles in India are priced between $10,000 and $15,000, which is lower than the cost of Tesla’s existing models.
While Tesla might establish a manufacturing plant in India to produce more budget-friendly cars, the exact timing of this move remains uncertain. Unfortunately, Tesla has yet to comment on its plans for India.
Another positive development is the news that EG Group, a European gas-station and convenience-store operator, is acquiring Tesla supercharger equipment. This acquisition suggests that more superchargers will become available, leading to increased charging revenue for Tesla. However, it is important to note that this news alone is unlikely to fully explain the recent surge in the stock’s value.
In conclusion, while the exact reason for the surge in Tesla’s stock remains unclear, factors such as the recovery from a previous drop and the potential impacts of developments in India and the supercharger acquisition contribute to this notable upward trend.
Technical Analysis and the Potential for Tesla Stock
Technical analysis is a useful tool for understanding investor sentiment and predicting the future trajectory of a stock. Tesla, in particular, has caught the attention of Frank Cappelleri, founder of the technical-analysis research shop CappThesis. Cappelleri notes that Tesla is displaying positive signs, having recently formed a potentially significant higher low. From a chart pattern perspective, Tesla is getting close to triggering a bullish cup and handle formation. If the stock manages to break through the resistance at 226, it could reach the $241 to $242 zone, filling the earnings-induced gap.
A cup and handle formation occurs when a stock price experiences a dip and then recovers, forming a cup shape, before extending its gains in what is referred to as the handle.
Despite the potential of reaching $241, it is important to note that this would still be below where Tesla closed in September. At present, Tesla’s stock price hovers between its October opening and closing prices, which were impacted by underwhelming third-quarter delivery results and earnings.
In the near term, Tesla’s stock is expected to fluctuate between $200 and $250 until more information becomes available on fourth-quarter deliveries, including the highly anticipated Cybertruck, and how the updated version of the Model 3 is performing in China and Europe.
Wall Street analysts predict approximately 475,000 deliveries for Tesla in the fourth quarter, which would be a record-breaking figure. Additionally, there is an upcoming event scheduled to mark the initial Cybertruck deliveries later this month.
In a recent development, Tesla has included a clause within early Cybertruck orders. According to TheStreet, this clause prevents buyers from reselling the truck for a year, thereby minimizing the opportunity for speculative price flipping.
The Cybertruck has been in development for four years, and there are already hundreds of thousands of pre-orders. However, only a few will be delivered in the next few weeks, setting the stage for potentially significant profits should buyers choose to swiftly resell their vehicles.
Tesla has not yet responded to requests for comment regarding this clause.
Comments