Tesla Gains 12% After Partnering with Ford and GM
The stock has gained 45% in the last month and is now up by 126% so far in 2023. It is a surge that is rivalled only by the ascent of chip giant NVIDIA (NASDAQ: NVDA).
What was the catalyst this time? In the same week, Tesla announced partnerships with both Ford (NYSE: F) and General Motors (NYSE: GM). The agreements will see both legacy automakers have access to Tesla’s Supercharging network. This means that all new Ford and GM electric vehicles will be equipped with Tesla’s charging plug.
The excitement from Tesla bulls has to do with the potential for recurring revenues in the future. Any chance Tesla can get to move away from the capital-intensive process of making cars will help its margins. This is why so many are so excited about the potential of its FSD subscription platform as well.
But perhaps most importantly it re-affirms Tesla’s position as the king of electric vehicles and gives them a near monopoly over charging infrastructure in North America. The White House has also said that Tesla could be eligible for billions of dollars in subsidies as well. It’s hard to pull a bearish argument for Tesla’s stock, and that’s why everyone and their dog has been buying the stock this year.
Tesla (TSLA) Stock Outlook
Tesla also announced it is in discussions to build a new GigaFactory in Spain. This would be the second factory for Tesla in Europe after it opened its Berlin factory last year. With the recent subsidies in the United States, Tesla vehicles will be selling for some of their cheapest prices ever, which means demand should begin to ramp up again.
The bullish options flow continues to be through the roof for Tesla as well. Of course, this should always be taken with a grain of salt but it does give some indication of what institutions are thinking about the stock. For now, just as with NVIDIA earlier this year, there is no need to be contrarian and short this runaway train.
I’ve long been a Tesla bull and write regularly about what has become far and away the most popular stock on the market. So what do I make of this recent performance? First, as a long-time investor, I have learned to always be skeptical of these parabolic moves. Why? Because there is almost always a pull-back to re-test support and resistance levels. Despite what many people think, stocks do not always go up, so I’m waiting for Tesla to cool off over the next few weeks. Will I add more shares? Perhaps. Other things to consider are the CPI report next week and the potential for further rate hikes which would put a bit of a rain cloud over Tesla’s parade. The bottom line? It’s not time to short the stock yet, the bullish flow is still strong so steer clear of shorting into a clear uptrend.
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