Tesla (TSLA) shares have rallied in recent weeks and are now experiencing resistance at their 200-day moving average. Analysts are raising estimates for 2023 at the same time, heralding the addition of this 21st-century icon to IBD 50 growth list.
The deflationary bill will work in the company’s favor, with upside long-term implications for the renewable energy sector. A 3-for-1 stock split on Aug. 24 could also boost gains.
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TSLA stock is trading in a long consolidation at 1208.10 point of purchase, which is still 30% above Thursday’s closing price of 908.52. As Tesla shares challenge 200-day moving average resistance, watch for patterns that hold clues to lower buy points.
The stock reached above 1,200 in November 2021, giving way to a long and complex corrective pattern that bottomed out in the 600s in May. Since then, Tesla has added nearly 300 points, healing technical damage from the downturn. It also posted three strong quarters after the peak, beating forecasts by double- and triple-digit percentages.
Tesla is now expected to earn $12.29 per share in 2022, a dramatic 81% increase from 2021. This upward trend should continue through 2023, when a 46% increase in EPS is now forecast.
This component of the Nasdaq-100 has a strong growth record, reporting triple-digit revenue growth in five of the past six quarters.
The Composite rating rose to bichi 92 while EPS rating lags behind, at 77. Supply chain issues fueled by the pandemic weigh on that rating, which will retreat from the data series in the coming quarters.
Perfect ‘A’ timeliness and SMR ratings are notable, leading to the stock’s new membership in the IBD 50. Tesla also ranks first in the IBD Auto Manufacturers’ Group.
Tesla’s stock split will also boost the price
Shareholders approved the 3-for-1 stock split, effective Aug. 25.
Although a stock split does not change the underlying valuation, it often causes the price to rise as more investors can buy the stock at the new, cheaper price. As of August 25, the stock will trade in the 300 range, a more affordable price that could attract more buying interest.
Funds have increased their positions in Tesla over the past eight quarters. Among index funds, the American Century Focused Dynamic Growth Fund (ACFSX) and JP Morgan Large Cap Growth Fund (SEEGX) occupy significant positions.
The EV giant is a top-10 holding in the Invesco Growth ETF (QQQ) and a core component in Cathie Wood’s ARK Innovation ETF (ARKK).
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