Tesla may mean a lot of different things.
For the science community, it’s the one and only Nikola Tesla, designer of the modern Alternating Current electricity supply system.
For car enthusiasts and consumers, it’s the great electric sedans and SUVs.
But for us, traders, though… First and foremost, it is that seemingly eternally overvalued stock that still pulled off a nearly 10x price gain in 2020.
Shares of Tesla Inc (TSLA) have since pulled back from their January highs of $900 and are hovering in the $600-$700 range.
The opinions on the stock, the company and the CEO remain as polarized as ever, but one thing is for certain – maintaining aggressive optimism at current price levels takes some courage.
Well, with the stock chart sitting at the tipping point, can this courage provide good setups?
I could’ve gone in depth explaining the ins and outs of TSLA, but I think this picture is worth a thousand words:
It’s not hard to note the tipping point of TSLA’s multi-year consolidation on the chart – shares may definitely be due for a sharp move in either direction in the near future.
It appears that plenty of critics, not without merit, anticipated a move under $600 – a level the stock has clearly found support in since its big run up.
The reasoning was simple: market is shaky, fundamentals didn’t change nearly as much as the share price, the stock hasn’t pulled back a lot considering the magnitude of the 2020 run, $700 level gets continuously rejected, $600 can barely hold…
The earnings report of yesterday could’ve easily pushed the shares past that $600 area and sent them for a real retracement.
Except that… it never happened.
Earnings Are Good… Again!
Now look, I’m not here to argue whether the numbers justify the valuation and share price…
But one thing is for certain – this earnings report didn’t disappoint.
Here’s how TSLA’s latest quarter played out:
- EPS of $1.45 vs analyst consensus of $0.96
- Revenues of $11.96B vs analyst consensus of $11.21B
- Production of 206,241 vehicles vs consensus of 201,000
Justifiable valuation is a whole different story, but TSLA seems to keep delivering ahead of analyst’s expectations – and the market appreciates that.
“Sell the News” event never happened post-earnings and the main potential short-term negative
catalyst seems to have made the shares stronger.
Relative Strength and Strong Technical Support
I think one thing we can all agree on – TSLA has been incredibly strong following the 2020 run up.
We’ve seen many stocks that seemed to have temporarily lost any rationality behind price action – GME, AMC, TLRY, BBBY, you name it, really.
What defines most of these run ups – shares usually return back to where they came from quite quickly.
For TSLA – that hasn’t been the case at all:
Shares have barely pulled back 30% off the January’s all-time highs – not a scary pull back for a stock that’s up 10-fold in a matter of 12 months.
Plus, note that the $600 support held well every time, and as of lately, we actually started basing in the $625-$635 area – a consolidation higher is not a bearish event in my view.
Does TSLA Have More Room to Go?
Again, let me reiterate that I’m not arguing about the company’s value and I’m not taking any side in the bigger TSLA argument.
I’m only trying to point out that based on the recent price action and reaction to earnings – I’m really not seeing many reasons to be bearish in the short term.
I will be watching the stock closely in the coming days and weeks and if shares maintain current levels of $630-$650, I really wouldn’t be surprised to see a re-test of the $800-$900 range.