Why TSLA’s Momentum Continues to Defy Expectations

$Tesla Motors(TSLA)$ has once again captivated Wall Street, surging to an all-time high of $429.30 in intraday trading. The stock has climbed a staggering 64% since Donald Trump’s election victory, with November alone delivering a 38% rally—its best month since January 2023. While some may argue that the stock is overvalued, the momentum is undeniable, and the bullish chart setup suggests there may still be more upside. However, I remain cautious given the lofty expectations baked into Tesla’s valuation.

The “Trump bump” is a key factor behind Tesla’s latest rally. Elon Musk’s vocal support for Donald Trump and his role in the pro-Trump campaign effort have bolstered Tesla’s appeal among a broader audience. According to filings, Musk invested $277 million into the campaign, which many believe has expanded Tesla’s pool of enthusiasts and elevated its brand credibility among Trump supporters.

Furthermore, Musk’s anticipated role in the Trump administration as the head of the “Department of Government Efficiency” could prove beneficial for Tesla’s long-term ambitions. Musk’s influence may streamline federal approval processes for autonomous vehicles and potentially reduce regulatory hurdles—a significant advantage for Tesla’s future roadmap.

Another driving force behind Tesla’s rally is Wall Street’s renewed optimism. Analysts at major firms like $Goldman Sachs(GS)$, $Morgan Stanley(MS)$, and $Bank of America(BAC)$ have issued bullish reports, highlighting Tesla’s AI opportunities and the market’s forward-looking approach. This shift in sentiment has been instrumental in propelling Tesla to record highs.

At a price-to-earnings (P/E) ratio of 165, Tesla’s valuation is undeniably stretched. The current stock price reflects significant optimism about Tesla’s future, particularly its autonomous driving and humanoid robot projects. As someone who struggles to model out the potential profitability of these speculative ventures, I find it difficult to justify Tesla’s valuation at this level.

Annual Revenue

Tesla’s third-quarter earnings report offered a mixed bag. While revenue growth of 8% year-over-year fell slightly short of estimates, the company delivered better-than-expected profits. Musk’s optimistic forecast of 20% to 30% vehicle growth in 2025, fueled by lower-cost vehicles and advancements in autonomy, has provided a strong narrative for the bulls. However, these projections hinge on factors that remain uncertain, such as the successful rollout of affordable vehicles and the widespread adoption of Tesla’s autonomous driving technology.

TSLA Daily Chart

From a technical perspective, Tesla’s chart remains bullish. The stock is in a strong uptrend, with higher highs and higher lows confirming the positive momentum. Based on the current setup, I believe Tesla has more room to run before any significant profit-taking occurs.

My next target for the stock is $454.50, a level where I expect to see stronger resistance and potential consolidation. While the rally may continue in the short term, I’m mindful that stocks trading at such elevated levels are prone to sharp corrections if market sentiment shifts or expectations aren’t met.

Despite Tesla’s impressive run, I approach the stock with caution. The valuation argument is easy to make here—Tesla is priced for perfection, and any misstep in execution could lead to a sharp pullback. The hopes pinned on robotaxis and humanoid robots are massive, but they remain speculative at best. Until there’s more concrete evidence of profitability from these ventures, I find it challenging to fully embrace the bullish thesis.

Another concern is the macroeconomic backdrop. Tesla’s early-year struggles, including a 29% drop in Q1 2024, remind us that increased competition and macro headwinds can weigh heavily on the stock. While the recent rally has erased those losses, it’s important to keep in mind that Tesla’s performance can be highly volatile.

In conclusion, Tesla’s current rally reflects a mix of strong technical momentum, Wall Street enthusiasm, and the “Trump bump.” While the bullish narrative around Tesla’s AI and autonomy ambitions is compelling, the stock’s valuation remains difficult to justify based on traditional metrics.

For now, I’ll stick to my target of $454.50, but I remain cautious about adding to my position at these levels. Tesla’s chart looks bullish, and the momentum is hard to ignore, but I believe prudent investors should tread carefully. As always, I’ll keep a close eye on the fundamentals and remain ready to adjust my strategy if the story changes.

@MillionaireTiger @Tiger_comments @Daily_Discussion @CaptainTiger @TigerSG @TigerEvents

Disclaimer: This is a general trade analysis and not financial advice. Always conduct your own research before making any investment decisions.