After enduring six consecutive losses, Tesla (TSLA) stock made a notable recovery on Monday, fueled by mounting anticipation surrounding the upcoming Cybertruck launch and an enhanced Model 3 release in China.
TSLA shares surged by 5.3% in Monday’s trading session, responding to insights provided by Baird analyst Ben Kallo, who highlighted several pivotal factors expected to drive the company’s stock performance during the latter half of the year. Kallo’s analysis emphasized that while price cuts and pressure on gross margins remain focal points for the global electric vehicle (EV) leader, the imminent launch of the Cybertruck, anticipated in Q3, along with other contributing elements, could serve as propellants for the upward trajectory of Tesla stock. Baird maintains an outperform rating on TSLA, with a price target of $300, representing a substantial 39% increase from the current trading value.
The excitement around the impending release of the Cybertruck has reached a fervent pitch, aided by numerous sightings of these futuristic vehicles on American roads. This surge in anticipation has translated to considerable activity on social media platforms. Even an overseas promotional video was recently discovered, featuring a Cybertruck cruising through the picturesque landscapes of Iceland.
Tesla is additionally gearing up for the debut of the upgraded Model 3, codenamed “Highland,” within the Chinese market. According to local reports, some stores have already started accepting reservations for this latest iteration. Bloomberg reported last week that mass production of the new Model 3 is slated to commence in September, indicating Tesla’s commitment to enhancing its presence and offerings in China’s burgeoning EV sector.
The tide turned for TSLA stock following a period of decline triggered by the company’s second-quarter financial results, unveiled on July 19. Despite exceeding earnings and revenue forecasts, concerns among investors over dwindling gross margins overshadowed the positive aspects of Tesla’s performance. Additionally, the stock experienced downward pressure possibly fueled by sales activity from Cathie Wood’s ARK Invest ETFs.
Tesla’s stock, which had faced an 11% setback and closed at $215.49 the previous week due to six consecutive losses, has managed to stay above its 200-day moving average. However, this decline brought the stock to its lowest point since the $213.97 closing value recorded on June 2. Two weeks ago, Tesla stock dipped below the crucial support level of its 50-day and 10-week moving averages, with a more than 2% deficit from the 10-week line, signaling a clear sell indication according to IBD analysis.
Despite the setbacks in August, Wedbush analyst Daniel Ives, a staunch Tesla supporter, voiced his unwavering optimism on CNBC last Wednesday. He attributed the recent sell-off to post-quarter anxieties and concerns regarding the Chinese market. Ives categorized this situation as an opportunity and asserted that Tesla’s current valuation presents a compelling buying proposition.
In summary, Tesla’s stock rebounded on Monday, countering a series of losses, spurred by growing enthusiasm for the impending Cybertruck launch and the imminent release of an upgraded Model 3 in China. As the company navigates challenges related to pricing strategies and gross margins, these promising developments have reinvigorated investor sentiment and positioned Tesla for potential growth in the coming months.
Source: Investor’s Business Daily
