Tesla (TSLA) Is Poised For A Short-Term Rebound: Here’s Why
JEsla (TSLA) stock is poised for a near-term rise following a “tour de force” first-quarter results that strongly beat Wall Street expectations. The fast-growing electric vehicle (EV) maker reported $3.32 billion or $3.22 in earnings per share while revenue hit $18.76 billion. The Street expected $2.26 per share and $17.8 billion in revenue.
Shares jumped more than 10% on the news on Thursday, although they then fell back to close just over 3%. Despite the rise, the company’s shares remain down 16% for the year. The charts show that significant gains could be in the works.
“When you see a gap like this after a pullback, you tend to see an upside follow-up,” said Katie Stockton, founder and managing partner of technical analysis firm Fairlead Strategies, adding that the stock could win in the days and weeks to come.
And if Tesla can raise another $200, it could go up even further, Stockton predicted. “Resistance starts around $1200 which is quite strong from previous highs. It all depends on the band [upcoming news, etc]. If it’s much stronger than now, they’ll have an easier time breaking that resistance.
The adage “sell in May and leave” could spoil any rally, however, as the stock market typically declines during this month and short-term charts show that a correction could occur at this time.
However, CFRA analyst Garrett Nelson does not expect a May sale to slow Tesla’s growing momentum.
“The stock has already pulled back [enough] and is comfortably below its 52-week high and you have to watch history,” Nelson says. “Every other company is struggling with inflation, but Tesla continues to turn the tide and is able to pass price increases on to customers. They just had a quarter with 250% profit growth. because the demand for their vehicles is very strong, as well as the strength of their brand.”
Highlighting consumers’ love for the brand, Nelson said there are 1.3 million cyber truck reservations worth $80 billion creating a huge revenue backdrop.
He raised his 12-month target for TSLA to $1,350 from $1,300 following the earnings call in which management assured investors that future growth would hover around 50%, helping shore up Tesla in as king of the booming electric vehicle market.
“We see them reaching new record highs over the next 12 months from its latest all-time high (ATM) of $1243,” Nelson continued. “There is a lot of short-term momentum with the Shanghai plant shutdown now complete and the two new plants in Texas and Germany recently starting up. »
Echoing others, Nelson says Tesla has become a master at “underpromising and overdelivering,” beating earnings expectations in 10 of the past 11 quarters. It expects the highly anticipated cyber truck and light semi-truck models (scheduled for production in 2023) to be delivered earlier than expected, followed by its other key mini cooper roadster.
The humanoid robot Optimus, which Musk says could one day be worth more than Tesla, is also set to debut next year. This will help people shop or shop, providing more upside to the stock, which Cathie Wood predicts could quadruple to $4,600 by 2026.
This despite Musk’s claim that Tesla’s self-driving or fully self-driving (FSD) plans are plagued with delays (as well as plans for a robotaxi in 2024 compared to an original 2020 timeline) after promising that it would be ready in 2017. Analysts say Tesla may not launch FSD until the end of the decade, though they insist it leads the auto industry’s Autopilot race.
Then there’s Twitter (tWTR), which Musk wants to buy and take private to boost Tesla’s marketing efforts and promote free speech.
Musk has secured $46.5 billion from a group of banks led by Morgan Stanley (MS) to take over the social media giant and defeat its poison pill in a takeover bid that could succeed if 35 40% of shareholders support it. Musk is reportedly in talks with takeover companies to arrange a joint takeover.
The deal could fall through, however, if another PE bidder (Silver Lake and Elliot Management have been touted as potential suitors) emerges, adding pressure on Musk to sweeten his $43 billion offer.
However, Wedbush analyst Dan Ives, who has a $1,400 price target on Tesla, said “Twitter is not an ideal PE takeover given its business model and lack of FCF ( free cash flow) which could create difficulties in finding another bidder at a higher price.”
Whatever happens, the mercurial Musk could also cross it alone:
“He has the resources, and that’s a drop in the bucket when you look at his overall wealth,” Nelson added. “Some say Twitter will be a distraction from Tesla management, but if someone can juggle all the businesses [such as SpaceX and/or the Boring Company’] it’s him.”
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.