Shares of electric vehicle manufacturer Tesla Motors Inc (NASDAQ:TSLA) rallied on Thursday after the company reported first-quarter results that were better than expected.
TSLA stock has mostly traded in a choppy fashion in 2015, but recent price action, including Thursday’s post-earnings move, increasingly point to signs of a better multi-week advance ahead.
TSLA Earnings Recap
Specifically for its first quarter, Tesla came in with an adjusted loss of 36 cents per share, which was better than analysts’ expectations for a loss of 49 cents. The company also beat on the top line with sales of $1.1 billion versus the $1.04 that analysts were looking for.
Tesla delivered more than 10,000 cars in the first quarter and is expecting to produce about 12,500 vehicles in the second quarter.
While the focus for analysts will likely remain on the rate of growth in sales of Tesla cars including of the upcoming model X, the company is also pushing further into the battery business. I have long argued that Tesla should be considered a technology company more so than an automobile company, considering the way it innovates and manufactures and grows, which by extension would also mean that TSLA should be valued like a technology company.
TSLA Stock Charts
Moving over to the charts and starting with the bigger picture, TSLA stock for the most part over the past 14 months or so has found itself in a consolidation phase that has worked off the steep overbought readings from the 2013 rally.
As a result, the stock has also carved out a clear horizontal line of support where it most recently in late March again bounced off from. From a momentum perspective, we see that the Relative Strength Index (RSI) at the bottom of the chart is still working within a series of lower highs but has begun to turn up and show signs of better upside acceleration. The recent rally in TSLA stock has in the meantime also pushed it past the diagonal resistance line (red dotted line) from the September 2014 highs.
When we look at the daily chart of TSLA stock, we can see that the price action year-to-date has formed a double bottom (blue bubble) with its lows in January and late March. The rally in April has brought the stock back to its 200-day simple moving average (red line), which historically has worked well as a reference line of support/resistance for TSLA stock.
Thursday’s post-earnings price action saw the stock start off with a down-open that quickly reversed within the first 15 minutes of trading and continued with a rally in the afternoon, firmly pushing the stock into the green for the day.
The end result of Thursday’s price action was a so called bullish outside day that fully engulfed Wednesday’s price action. While TSLA stock technically remains in its nine-day consolidation phase, active investors could look to buy the stock on any follow-through strength in coming days on the back of Thursday’s constructive move.
A next upside target would be near $260, while any bearish reversal of Thursday’s strength would immediately call off the trade until further notice.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.
