TSLA – Weekly Chart
The price of TSLA jumped above resistance at the $300 level and now the stock trades in a gap up to $415. Many analysts are now concerned that the stock is overrated.
Fans of the EV-maker have been surging higher by Donald Trump’s presidential triumph. The stock’s recent climb has been unstoppable as investors buy into the shares and drive “euphoric” options trading.
The shares have now advanced over 39%, adding more than $300 billion in market capitalization since the election. Shares closed up another 9% on Monday alone to trade around $350.
Analysts point to the fact that Tesla is a classic “momentum” stock, where gains and losses can snowball quickly when investor sentiment takes a sharp turn either way.
Musk went all in on a Trump victory, so it’s understandable that the market is expecting some form of payback for his efforts, which could boost Tesla with action against Chinese car manufacturers. Tesla lost its place as the largest EV-maker in the world to China’s BYD.
Options traders are betting that there will be further gains with the premium of three-month calls over puts now trading at the highest since early 2021, with sizable volume in contracts betting on a rally to $450 and above.
A Trump White House will be a “game-changer” for Tesla’s self-driving and artificial intelligence plans, according to Wedbush analyst Dan Ives. He raised his price target on Tesla to $400 from $300 earlier and estimated that the “AI and autonomous opportunity is worth $1 trillion alone for Tesla”.
“Despite possible benefits from the election, Tesla stock looks overvalued,” said Seth Goldstein, an analyst at Morningstar.
There is still potential for further gains in Tesla but traders should be cautious of any correction. Elon Musk spent around $44 billion to buy Twitter, which he renamed to X, and at least $130 million to help get Donald Trump elected president. But that outlay has paid off for Musk who is now around $70 billion richer on paper with Tesla’s increase.