With a 50% Rally in Sight, is it Time To Buy Tesla Motors Inc (TSLA)?

Tesla Inc (TSLA)

Tesla Motors Inc. has had ups and downs this year, leaving investors wary of the stock, but one trader believes the electric car maker is set for a big jump-start. On Monday’s CNBC’s Trading Nation, Todd Gordon of TradingAnalysis.com said that the EV maker has stalled, staying somewhat range bound over the last three trading years, but the charts point to better times ahead for the stock.

Tesla Motors Inc (NASDAQ:TSLA) Model 3

Tesla chart – what it shows?

Gordon indicated two trends that signal it is time to buy the stock. On Tesla’s daily chart, Gordon first analyzed the lows the automaker has hit this year. Gordon drew a line from February lows through the drop in June, and sees an uptrend going through $210 that could continue in the future.

In addition, the trader takes a look at the highs Tesla made this year on the same chart, extending a line that crossed the previous uptrend line at $210. The trader determines that this is the line of support for the stock. He points out that the stock has already broken through, which means that soon it would be time for investors to buy Tesla shares.

Referring to a level just about $5 below where the automaker was trading on Monday midday, the analyst said, “We have technical support from two different trend lines right at about the $210 region.” So, if investors likes Tesla’s fundamental story, then this technical setup offers a great “opportunity to be in on the long side.”

How much could Tesla Motors Inc. rise? Gordon thinks the stock could jump almost 50% from current levels based on Tesla’s consolidated trading range over the last three years and the technicals. “You could potentially risk $10 to $12 on this trade to make possibly a break out towards the range,” the trader said.

Bearish signs also visible

Currently, the stock is down about 10% year to date, suffering from failures in delivery deadlines, doubts surrounding its $2.8bn bid for SolarCity and concerns about the safety of its self-driving feature after the recent crash. The EV maker has been quite aggressive in getting the self-driving tech to the public, but currently, it is under government scrutiny after a fatal crash of a Model S in Florida on May 7, which resulted in the death of the driver. The car was using the Autopilot feature.

Last week, Tesla Motors Inc. introduced new versions of its Model X and Model S that boosts the driving range and speed. The new versions are powered by an updated battery technology. The US-based carmaker said it is the fastest-accelerating car in the commercial production now. However, since that announcement on Aug 23, the stock is down 3.5%.

On Monday, Tesla shares closed down 2.18%. Year to date, the stock is down almost 10% while in the last one-year, it is down over 13%.

Disclaimer: The above should not be considered or construed as individualized or specific investment advice. Do your own research and consult a professional, if necessary, before making investment decisions.

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    All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.

    Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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