- Tesla shares rose about 5% during Monday's session after it beat delivery estimates for the quarter and nearly reached the 500,000 delivery mark for 2020.
- Wedbush Securities analyst Dan Ives believes that the 500,000 deliveries mark is significant but says that future growth will depend on Chinese demand.
- The stock moved into overbought territory during Monday's session, which suggests that traders could see some consolidation ahead.
Tesla delivered 18,920 Model S and Model X vehicles and 161,650 Model 3 and Model Y vehicles for a total of 180,570 vehicles while producing 179,757 vehicles during the quarter. The numbers fall just shy of the company's 500,000 vehicle delivery target for 2020 at 499,550 but come despite the Fremont factory shutdown period during the spring.
Wedbush Securities analyst Dan Ives believes that the 500,000 delivery mark in 2020 is a major milestone but says that China represents the greatest opportunity moving forward. With Tesla's Giga 3 factory as a major competitive advantage, the analyst believes that the company could reach the 1 million delivery mark by 2022 if Chinese demand stays on its current path.
Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. These factors allow the productive entity to generate more sales or superior margins compared to its market rivals.
From a technical standpoint, the stock broke out from trendline resistance at around $731.00 during Monday's session. The relative strength index (RSI) moved into overbought territory with a reading of 72.65, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock could see some near-term consolidation, but the intermediate-term trend has turned bullish.
Traders should watch for consolidation above trendline support at $731.00 over the coming sessions. If the stock breaks down, traders could see a move back into the price channel between $480.00 and $731.00, with support at the 50-day moving average at $540.00. If the stock breaks out, traders could see a move to fresh highs.
The Bottom Line
Tesla shares rose 5% to fresh all-time highs during Monday's session after the company beat fourth quarter delivery estimates. After the electric vehicle manufacturer nearly hit the 500,000 deliveries mark in 2020, many analysts are looking toward China as a key growth driver ahead. The stock could see some consolidation following the day's gains given the overbought RSI readings.
The author holds no position in the stock(s) mentioned except through passively managed index funds.