Why The Tesla Rally Could Continue

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TSLA: Tesla logo
TSLA
Tesla

Tesla (NASDAQ:TSLA) stock has seen a considerable rally, rising by 60% over the last 21 trading days. There are multiple factors driving the recent gains for Tesla. Firstly, the company’s Q4 2022 results were better than anticipated, with revenue growing 33% year-over-year to $24.3 billion, driven by higher deliveries. Adjusted earnings stood at $1.19 per share, marking a 40% year-over-year increase. Moreover, there are indicators that the deep price cuts that Tesla carried out over the last two months are stoking demand. For example, Tesla said that the rate at which orders were coming in as of January was roughly double its production rate. The company also indicated that it could deliver two million cars in 2023, up from around 1.3 million in 2022, provided that there are no external disruptions. The broader macro environment also appears to be helping Tesla stock. The U.S. Federal Reserve has slowed down its pace of interest rate hikes, with the most recent increase standing at just 25 basis points. The broader positive sentiment appears to have helped TSLA disproportionately, considering that it is a high-growth stock that still remains down by almost 50% from its 2021 highs.

However, now that Tesla stock has seen a gain of about 60% over the last month, will it continue to rally in the near term, or is a decline imminent? There were 41 instances in the last 10 years when Tesla stock saw a trailing 21-day rise of 60% or more.  31 of those instances resulted in TSLA stock rising over the subsequent one-month period (21 trading days). This historical pattern reflects 31 out of 41, or about a 76% chance of a rise in Tesla stock over the next month. See our analysis on  Tesla Stock Chance of Rise for more details.

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Returns Feb 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 TSLA Return 14% 60% 1282%
 S&P 500 Return 0% 7% 83%
 Trefis Multi-Strategy Portfolio -2% 10% 245%
Relevant Articles
  1. How Will Tesla’s Earnings Trend After A Tough Q1 Delivery Report?
  2. With Deliveries Falling And Inventory Piling Up, What’s Next For Tesla Stock?
  3. Down Almost 20% This Year, Is Tesla Stock Good Value?
  4. Down 9% Year-To Date, Will A Q4 Earnings Beat Drive Tesla Stock Higher?
  5. With Delivery Growth Cooling, Is Tesla Stock Still A Buy At $250?
  6. Following A Lackluster Cybertruck Debut, Is Tesla Stock Overvalued At $240?

[1] Month-to-date and year-to-date as of 2/11/2023
[2] Cumulative total returns since the end of 2016

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