Tesla Shows Positive Momentum Ahead of Q3 Deliveries, Faces Overbought Signals and Potential Pullback

Technical Analysis

Tesla, Inc. (TSLA) demonstrated a positive momentum at a closing price of $260.46 on September 27, 2024, reflecting a gain of 2.45% or $6.24. The stock is currently trading significantly above its 50-day moving average of $222.17 and the 200-day moving average of $202.53, indicating a strong bullish trend. The Relative Strength Index (RSI) sits at 82, suggesting the stock is entering overbought territory, which could lead to a corrective pullback in the near term.

The stock shows resistance at $262.33 and has support at $241.03, with current levels suggesting it may test resistance in the next trading day. Given the 3-month MACD reading of approximately 8.93, the upward trend remains intact. The average volume of 97.13 million suggests strong trading interest, although much lower volume was noted on the last trading day at 70.22 million, indicating potential volatility.

Fundamental Analysis

Tesla's current earnings per share (EPS) stands at $3.56, giving it a high price-to-earnings (P/E) ratio of 73.16, reflecting elevated valuation levels largely due to growth potential and market expectations. Analysts forecast a target consensus of approximately $247.84, with a wide range indicating considerable uncertainty about the stock's intrinsic value, as notably highlighted by the discounted cash flow (DCF) estimate of $74.12.

Recent news indicates anticipatory excitement surrounding Q3 delivery results, with projections suggesting that figures will surpass market expectations, particularly bolstered by strong performance in China. Analysts forecast Q3 deliveries of between 465,000 to 470,000 units, exceeding the expected 462,000 units.

The upcoming earnings announcement on October 16, 2024, promises to be a pivotal event, as significant performance metrics are anticipated to influence investor sentiment further.

Predictions

For the next trading day, TSLA might experience further upward movement towards $262.33 resistance, driven by positive sentiments from expected delivery results. However, the overbought RSI suggests potential for a short-term correction, potentially bringing the stock back towards the support level of $241.03 within the week if profit-taking occurs.

Looking ahead to the upcoming week, depending on the Q3 delivery numbers and overall market reactions, if the results impress, TSLA could break through resistance levels and test new heights, possibly approaching the year high of $271. Conversely, disappointing results or broader market corrections could lead to decreased prices.

Intrinsic Value and Long-term Investment Potential

The intrinsic value as per DCF calculations, at $74.12, significantly diverges from the current trading price, indicating that, at present levels, TSLA may be overvalued based on fundamentals. However, the robust growth narrative, particularly in electric vehicle adoption and Tesla's market dominance, implies strong long-term investment potential for growth-oriented investors.

Given the considerable market cap of $832 billion and high investor interest, TSLA remains a prominent player in the automotive and tech sectors, with innovative prospects ahead. The ongoing developments in autonomous vehicles and energy solutions could support sustained growth.

Overall Evaluation

Currently, TSLA is categorized as a 'Hold' candidate. While there is potential for substantial upside if Q3 results meet or exceed expectations, the stock's elevated RSI and significant variance between intrinsic and market value suggest caution. The upcoming earnings announcement will be crucial in determining the stock's trajectory, and investors may find it prudent to assess market conditions post-announcement before making decisions.