Tesla Inc.’s stock has finally broken through upside technical resistance, entering bull-market territory after several failed attempts. Analyst upgrades and labor challenges faced by Tesla’s competitors have contributed to this milestone.
Technical Set Up
Following a high of $293.34 on July 18, the stock experienced a 26.5% decline, reaching a closing low of $215.49 on August 18. This prompted concerns of a potential bear market, defined as a decline of at least 20% from a significant high.
Despite this setback, the stock rallied by as much as 19.8% to reach a four-week high of $258.08 on August 31, narrowly missing the bull-market threshold before retracing.
The stock also encountered strong resistance at the 50-day moving average line, a key short-term trend indicator. Although the stock traded above this line multiple times and even closed slightly above it, it struggled to maintain those gains.
A Breakthrough Moment
However, on Monday, Tesla’s stock surged by 10.2% during afternoon trading, surpassing resistance at the 50-day moving average line currently at $256.63.
This performance marks Tesla’s best one-day gain since January 27 and positions the stock 26.6% above its bear-market low on August 18.
Tesla’s Fundamental Boost from Morgan Stanley
Tesla shares have received a significant boost from an upgrade at Morgan Stanley, where analyst Adam Jonas has set a Street-high target of $400. The upgrade is based on an artificial-intelligence opportunity for the electric-vehicle company. This optimistic outlook from Morgan Stanley has positively impacted Tesla’s stock.
Workforce Advantage for Tesla
According to Dan Ives from Wedbush, Tesla’s workforce being non-unionized gives the company a distinct advantage over its rivals. In contrast, rival automakers such as General Motors Co., Ford Motor Co., and Stellantis N.V. are likely to face labor strikes due to unionized workers. This means that Tesla won’t have to deal with the potential delays and disruptions caused by labor strikes, which could hinder other automakers’ electric vehicle (EV) roadmap.
The Consequences of a Labor Strike
Ives further explains that if negotiations fail and a strike occurs among GM, Ford, and Stellantis, it would result in these companies falling further behind Tesla in terms of EV development. The potential strike could push their EV roadmap out into 2024, giving Tesla a significant advantage in the market.
Furthermore, Ives emphasizes that if the major proposals put forth during negotiations are accepted, there will be billions of incremental annual costs for Tesla’s competitors. These additional costs would have a damaging effect on these companies and ultimately lead to increased prices of EVs for consumers over the next 12 to 18 months.
Tesla’s Impressive Performance
Tesla’s stock has performed exceptionally well recently. Over the past three months, it has rallied by 12.1%, making it one of the top gainers in the S&P 500 index. Year to date, Tesla’s stock has soared by an impressive 122.4%.
Considering these factors, Tesla is currently positioned as a frontrunner in the electric-vehicle industry, benefiting from positive market sentiment and advantageous labor conditions.