While the rest of the automotive world remains under intense pressure, Tesla (NASDAQ:TSLA) stock is a bit of an anomaly. Shares have hit new record highs this year, eclipsing $1,000 for the first time in June 2020. However, Tesla stock looks like it could run even higher.
The stock’s performance has left many bears in total dismay. In fact, the performance from many electric car stocks has done as much.
Nio (NASDAQ:NIO) shares are on fire, up almost 250% from the March lows and up more than 125% in the last 25 trading sessions. Nikola (NASDAQ:NKLA) has a near-$25 billion market cap and has seen its stock soar over the last few weeks, even without a vehicle in mass production yet.
This type of action is flooring many investors and in many cases, it’s understandable. The valuations here are high — even astronomical in some cases. But that hasn’t stopped them from running yet, leaving many to wonder if it ever will.
Trading Tesla Stock
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Not being bound by valuation is reminiscent of Amazon (NASDAQ:AMZN) or Netflix (NASDAQ:NFLX). These two stocks were hated by short-sellers, too. That’s as they continued to rise with a valuation that only seemed to expand. These stocks were not bound by traditional valuation metrics like most other companies.
While Nio and Nikola will likely face some reckoning, Tesla stock looks bound to continue higher. That’s based on both technicals and fundamentals.
Regarding the latter, the company has momentum. Its Model Y came into production faster than expected, while demand for its other vehicles has not died off in the way many bears had hope. The Cybertruck continues to see elevated levels of popularity, too.
Simply put, Tesla stock remains exciting and in demand because its products are exciting and in demand.
While Tesla shares did see a 63% peak-to-trough decline, many shorts were hoping for more. That’s as Ford (NYSE:F) sank to single digits and as others came under intense pressure. It’s also as automakers face an incredibly difficult operating environment amid recessions thanks to their business structures.
For Tesla though, the stock just keeps on pumping higher.
Look at the way shares are bubbling just over $1,000. Each dip continues to be bought and keeps getting more shallow. Even in the last full week of June when the market was swooning, TSLA shares held strong.
A move over $1,012 would be a weekly rotation higher, putting the prior week’s high at $1,019 in play. Above that and the monthly hit at $1,027.48 is in play. A close above that potentially puts the 123.6% extension in play near $1,115.
On the downside, see if the 20-day moving average continues to hold as support.
Tesla Is the Future
Shares briefly tagged a $200 billion market cap on June 30, the last day of the second quarter. You don’t get to one-fifth the size of Apple (NASDAQ:AAPL) by being a total chump.
Wall Street bulls clearly see something that other investors can’t see — be it old-school auto fans, investors bound by traditional valuation metrics, or those who simply don’t understand Tesla.
Tesla is one of, if not the leader in electric vehicles. While others both new and old begin to move more toward electric, Tesla’s lead continues to build.
It got its Shanghai plant up and running despite doubts that it could be done. Now it’s scoping out locations in Europe to do the same thing. Yes, the stock gets plenty of negative attention when CEO Elon Musk says something dumb. And yes, the company gets bad news coverage when something goes wrong with one of its cars.
But the fact of the matter is, Tesla made electric vehicles cool. Gone are the days of slow electric wannabe cars with a short-range charge. Tesla’s vehicles are long-range performance vehicles that have been a hit so far.
As its lead builds in autonomous driving and electric vehicles, its lead will build in the global auto sector. There will be bumps along the way, but long-term investors will be rewarded for sticking with Tesla stock.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.
