Tesla
stock is taking off, but there is no splashy news event to explain it. The stock’s starting point, plus the cumulative impact of a few other factors, are behind the move.
Stock in the electric-vehicle company was up over 4% Monday afternoon at $223.93, while the
S&P 500
and
Nasdaq Composite
were both close to flat.
That leaves the price up about $15 from where it closed on Thursday, after HSBC analyst Michael Tyndall launched coverage of the stock with a Sell rating and a $146 price target. That report shook confidence, sending shares down 5.5%.
A bounce back from that move could be driving shares higher.
There are some tangible things to point to as well. Sunday, the Financial Times reported that India was considering cutting tariffs on Tesla (ticker: TSLA) electric vehicles. That lowers the cost of EVs for Indian buyers, but investors should remember that the Indian car market is small.
About 16 million two- and three-wheeled vehicles were sold there in 2022, compared with fewer than four million four-wheeled passenger vehicles. Many new cars in India sell for $10,000 to $15,000, so Tesla’s existing cars cost more than many consumers are willing or able to pay.
Tesla might eventually put a plant in India where it would likely make a lower-priced vehicle, but the timing for that is far from certain. Tesla didn’t respond to a request for comment about its India plans.
A separate piece of positive news is that the European gas-station and convenience-store operator EG Group is buying Tesla supercharger equipment, according to the EV publication Electrek. EG Group didn’t immediately respond to a request for comment.
Having more superchargers in use would mean more charging revenue, but that and the report about India likely didn’t trigger the stock’s leap on their own.
CEO Elon Musk might deserve some credit, too. He tweeted on Sunday that version 12 of Tesla’s Full Self Driving software would be ready in “about two weeks.” That might be important to Tesla bulls who believe improving autonomous driving software can fuel the adoption of Tesla’s FSD product. It costs $12,000 to purchase or can be subscribed to for $199 a month.
Technical analysis—the use of charts to get a sense of investor sentiment and where a stock can go over the near and medium term—sheds more light. Tesla “is following through after making a potentially key higher low last week,” said Frank Cappelleri, founder of the technical-analysis research shop CappThesis. “From a chart pattern perspective, it’s now close to triggering a bullish cup and handle formation. A breakout through 226 initially would target the $241 to $242 zone, which would fill the earnings-induced gap.”
In a cup and handle, a stock price dips and recovers, creating a cup shape, and then extends its gains, sketching the handle.
Even if the stock gets to $241, it will be below where it closed in September. For now, Tesla stock is right between where it opened and closed in October, which included disappointing third-quarter delivery results and earnings.
The shares will likely keep vacillating between $200 and $250 until investors get more information about fourth-quarter deliveries, including of the Cybertruck, and how the updated version of the Model 3 is selling in China and Europe.
Wall Street expects about 475,000 deliveries in the fourth quarter. That would be a record. An event marking the initial Cybertruck deliveries is scheduled for later this month.
Tesla also is adding a clause to early Cybertruck orders, according to TheStreet. Under most circumstances, buyers can’t resell the truck for a year. That is designed to make sure there isn’t an opportunity to flip the truck at a higher price.
Cybertruck has been four years in the making. There are hundreds of thousands ordered and only a few will be delivered in the coming weeks. That’s a setup for strong profits from a quick resale.
Tesla didn’t respond to a request for comment about the clause.
Write to Al Root at allen.root@dowjones.com
Read the full article here