Tesla Roars to Life, Here’s Our New Price Target

Last week, we noted that Austin, Texas-based EV manufacturer Tesla TSLA was on the verge of a breakout. Tesla formed a massive rounded bottom during the first half of the year (shaded yellow), a clear indication that a breakout was coming.

In just over a week, Tesla has gained about 25%. Over that same stretch, the S&P 500 advanced by just 1%.

This week marked a major turning point for shareholders, as the stock is now down by less than 1% year-to-date. On April 22, the stock was down 42% from the start of the year. Last year, Tesla shares climbed 101.72%.

Tesla didn’t just break out — it roared from zero to 200 mph like an Indy car on an open track.

Tesla smashed through twin resistance — its 200-day moving average (red) and a bearish trendline that had been intact for over two years (upper dotted line). The move occurred on heavy volume (green arrow), indicating the likely presence of large institutional buyers. Since large buyers tend to build positions over time, this increases the likelihood of an extended move.

How far will Tesla go?

The stock has a free ride to $265, a resistance point from late December (point B). Given the stock’s current momentum, combined with its proximity to that figure, Tesla should cruise past that obstacle.

Perhaps more daunting is a high point reached in December of last year (point B). That figure lies at $299, which marked the stock’s highest intraday price in 2023.

Tesla would need to climb another 21% to reach $299, which is my intermediate-term price target for the stock. Wedbush analyst Dan Ives seems to concur, as he recently announced a $300 target for the stock this year.

There are multiple reasons behind this move. To put it succinctly, the narrative surrounding Tesla has made a complete 180-degree turn.

Earlier this week, Tesla announced that second-quarter deliveries, while 4.8% lower than the previous year’s second quarter, were above Wall Street estimates. This was a sharp reversal from Q1, which saw an 8.5% decline from the year ago quarter.

Strength in China, where Tesla is offering 0% financing on certain models, helped the company beat Wall Street’s estimates. This bodes well for the company’s second-quarter earnings, which are scheduled to be released after the July 23 close.

On August 8, Tesla is scheduled to introduce its Robotaxi. The company has patented a system for automatically sanitizing enclosed spaces, which theoretically could make the vehicle self-cleaning.

In May, Musk claimed that the Optimus robot has the potential to make Tesla a $25 trillion company. Tesla’s current market capitalization is $772 billion.

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At the time of publication, Ponsi was long TSLA.