The central theses
- Tesla stock surged around 5% on Monday after beating delivery estimates for the quarter and nearly hitting the 500,000-ship mark for 2020.
- Dan Ives, an analyst at Wedbush Securities, believes the 500,000 shipments mark is substantial, but says future growth will depend on Chinese demand.
- The share moved in overbought Territory during Monday’s session, suggesting traders might see some Consolidation ahead.
Tesla shipped 18,920 Model S and Model X vehicles and 161,650 Model 3 and Model Y vehicles for a total of 180,570 vehicles and produced 179,757 vehicles in the quarter. The numbers are just below the company’s goal of delivering 500,000 vehicles in 2020 at 499,550, but are still in spite of the spring shutdown at the Fremont plant.
Dan Ives, an analyst at Wedbush Securities, believes the delivery mark of 500,000 in 2020 is an important milestone, but says China is the greatest opportunity for the future. Given Tesla’s Giga 3 factory as a huge competitive advantage, the analyst believes the company could hit the 1 million mark by 2022 if Chinese demand stays on its current path.
Competitive advantage refers to factors that enable a company to produce goods or services better or cheaper than its competitors. These factors enable the productive company to generate more sales or superior margins compared to its market competitors.
Technically, the stock broke out of the trend line resistance at around $ 731.00 during Monday’s session. The Relative Strength Index (RSI) moved into overbought territory at 72.65, but the moving average convergence divergence (MACD) saw a bullish crossover. These indicators suggest the stock may consolidate in the short term, but the medium term trend has been positive.
Traders should look for consolidation above the trendline support at $ 731.00 in upcoming sessions. If the stock collapses, traders could see a return to the price channel between $ 480.00 and $ 731.00, with the 50-day moving average at $ 540.00. If the stock breaks out, traders could see a move to new highs.
The bottom line
Tesla stock rose 5% to a new all-time high on Monday after the company beat estimates for fourth-quarter delivery. After the manufacturer of electric vehicles almost hit the 500,000 mark in 2020, many analysts see China as an important growth driver for the future. The stock could see some consolidation after the day’s gains given the overbought RSI levels.
The author does not hold any position in the stocks mentioned, except through passively managed index funds.