Simply put, Tesla (TSLA.O) stock is on an unstoppable run. Of course, investors know that the rally will eventually slow down. But according to technical analysts, now is not the time to bet on a slowdown.
“I would have thought that hitting $400 would have triggered some profit-taking,” said Frank Cappelleri, founder and market technician at CappThesis. “It doesn’t look like that’s happening.”
Cappelleri believes Tesla could hit $400 after the stock breaks through the key $270 level, a breakout that occurred after the Nov. 5 presidential election. That’s a pretty accurate call, and while he’s a little surprised Tesla’s stock hasn’t slowed down yet, he sees reason for further gains.
“Doing a rough calculation,” he added, the stock price rose about 1,850% from the July 2010 low to September 2014, and about 3,500% from the June 2019 low to November 2021. As of this week, Tesla shares are up about 350% from their 2023 low. “This suggests that this may still be the early stages of the third huge rally for the stock starting in 2010.”
Cappelleri isn’t the only one pointing out that Tesla is poised for big gains. With the all-time high — about $414 — now breached, Katie Stockton, founder and technical analyst at Fairlead Strategies, expects the stock to climb toward more than $500.
Neither analyst values Tesla based on fundamentals. Technical analysts study charts, trading patterns and historical trends to predict short- and medium-term stock price performance. In this regard, Tesla is still doing well.
Yet, there are always reasons for the stock's rise. In Tesla's case, investors believe that self-driving technology is transformative. Tesla plans to launch a self-driving taxi service by the end of 2025. In addition, a new, lower-priced model will also be launched this year. These two factors could drive faster growth and make 2025 a repeat of 2021's success - after the stock price soared 743% in 2020, it rose another 50% in 2021.
"As long as the belief in accelerating growth remains, it will continue to fuel the rally," said Douglas Busch, founder and technical analyst at ChartSmarter, who also sees no reason for the stock to slow down and predicts Tesla could be worth more than $700 by the end of 2025.
That's a few months away. In the short term, Tesla may get a further boost from Wall Street. Late Monday, Mizuho Securities analyst Vijay Rakesh upgraded Tesla's stock rating from "hold" to "buy" and raised the price target from $230 to $515, citing the prospects for its autonomous driving business.
Rakesh values Tesla's core automotive and energy storage businesses at about $204 per share, autonomous driving technology at about $176 per share, and humanoid robotics technology at about $135 per share. If everything performs better than expected, his optimistic target price will reach about $670 per share, with the potential upside mainly coming from autonomous driving and robotics.
His price target is in line with Wedbush analyst Dan Ives, who raised his price target to $515 from $400 on Sunday, sending Tesla shares up 6.1% to $463.02 on Monday. Ives’ “bullish” price target is $650.
Over the long term, technicals and fundamentals need to converge. But right now, the stock price chart agrees with investors that Tesla will see big earnings growth in the future. Sure, there are risks to earnings estimates, but the market is more focused on the potential for big returns right now.
Article forwarded from: Jinshi Data