Continue Reading Below
Shares of the Palo Alto, California-based electric vehicle maker gained 1.35 percent on Friday, hitting their highest level since March 3. Shares have gained 66 percent since Tesla reported better-than-expected deliveries on April 2.
“It all started when deliveries were much better than feared,” Dan Ives, an analyst at Wedbush Securities, told FOX Business. “The street is looking beyond the next quarter or two and starting to see a massive trajectory take form in China around both demand as well as production of Model 3s and that's been gasoline in the tank of this rally.”
Tesla delivered a record 88,400 vehicles in the first quarter, navigating the shutdown of both its Fremont, California, and Shanghai production facilities to slow the spread of the COVID-19 pandemic.
Matt Maley, managing director and equity strategist at the New York-based asset management firm Miller Tabak, told FOX Business that Tesla shares are a “momentum” play and this is another time to “sell the rally.”
Absent Tesla returning to its all-time high of $968 in short order, shares will see at least a 50 percent retracement of the rally off the March 23 low, putting them at $560. Another level of technical support rests at $512, he said.
The April 2 low of $454.50 is “going to be really important support for the stock” because setting a lower low “will show this rally has been a failure,” Maley said.
Ives, who has a base-case price target of $420 a share, admits bullish investors have gotten “a little overzealous” during the recent rally, but says they remain focused on the “long-term electric-vehicle market opportunity in China.”
Tesla is the “main way to play at that theme on the other side of this dark valley,” he said, adding that his long-term bull thesis has Tesla at $1,000 a share.
Tesla is scheduled to report its first-quarter results after the closing bell on April 29. Wall Street analysts surveyed by Refinitiv are expecting a loss of 12 cents a share on revenue of $5.93 billion.
Tesla shares were up 84 percent this year, including Friday’s preliminary gain.