Tesla Nears 800 After Strong Q3 Deliveries

Tesla Inc. (TSLA) is trading higher by nearly 3% in Monday’s pre-market after the electric vehicle manufacturer reported Q3 deliveries of 241,300 vehicles, The rally has added to impressive gains since the middle of August, lifting the stock to a 7-month high within a hundred points of January’s all-time high at 900.40. Accumulation has ticked higher with price during this period, perhaps setting the stage for a buying spike above the 1,000 level prior to year’s end.

Benefiting From Strong Demand

CEO Musk and Co. have been busy as bumblebees during the third quarter, engaging in a series of initiatives that include entering the African market with Supercharger stations, cutting a deal with Samsung to produce self-driving chips, and obtaining a patent for electric drive unit cooling systems. However, persistent reports of self-driving mishaps have drawn the unwelcome attention of the National Transportation Safety Board, which has opened an investigation.

A CNBC analysis recently noted that electric vehicle sales comprise just 2% of the automotive market right now, with segment penetration expected to reach the 6% to 8% level by 2025. The report mentions that EV sales are down at many manufacturers this year, due to chip shortages, but that didn’t seem to impact Tesla in the third quarter. More importantly, half of electric cars and trucks are being sold within 10 days, marking a record pace that highlights intense demand.

Wall Street and Technical Outlook

Wall Street consensus has deteriorated after 2020’s historic share gains, yielding a ‘Hold’ rating based upon 16 ‘Buy’, 1 ‘Overweight’, 13 ‘Hold’, and 3 ‘Underweight’ recommendations. Incredibly, 8 analysts now recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of $67 to a Street-high $1,591 while the stock will open Monday’s session about $35 above the median $764. This placement suggests that Tesla is fairly-valued at this time.

Tesla gained over 800 points from the March 2020 low to January 2021’s all-time high and sold off to 539.49 in March. The stock has traded within those range boundaries for the last seven months and is now situated between the .618 and .786 Fibonacci selloff retracement levels.  In turn, this predicts the current impulse will reverse near 825 while channeled price action since May shows support near 720. As a result, an entry at that level could offer a low-risk buying opportunity.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.