Tesla Inc. (NASDAQ: TSLA) saw its stock surge nearly 20% in a single session following its Q3 earnings report, which surpassed Wall Street expectations and reignited investor confidence after recent concerns about the company’s growth trajectory.
This impressive rally led to a record-breaking $126 billion increase in Tesla’s market cap within a single day, the largest one-day jump in the company’s history.
The robust earnings report, paired with a projection of “slight” growth in deliveries, has helped ease some skepticism following the disappointing reaction to its Robotaxi event.
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Now, Tesla is targeting a price of $380 by early 2025, with strong technical indicators and solid fundamentals driving its potential upward momentum.
A Bullish setup: Technical indicators point to new highs
A recent analysis by Tradingshot highlights a Channel Up pattern that has been in place since Tesla’s January 2023 low, with October’s dip mirroring the pullback in April 2023.
This repeated pattern suggests Tesla may be poised for another substantial upward move, echoing its early 2023 rally.
Adding to this bullish setup, the one-day Moving Average Convergence Divergence (MACD) has recently crossed bullishly below the “Lower Highs” trendline, indicating potential upward momentum similar to the breakout seen in May 2023.
Historically, this MACD bullish cross has served as a strong confirmation for price rallies, such as Tesla’s 195% rise following its January 2023 bottom. The current MACD momentum hints that Tesla could be in the early stages of another significant leg up.
Reclaiming the 50-day moving average, a key support level, further strengthens this setup, with the next significant resistance levels at $299.50 and then $380. A breakout above $299.50 would confirm a new rally phase, with $380 as the next logical target.
Fundamental strength: Earnings and margin recovery
Tesla’s third-quarter financial results exceeded Wall Street expectations, primarily due to an impressive gross margin recovery, which rose to 19.8%, well above the projected 16.8%.
This recovery has reinvigorated investor optimism and led to Tesla’s best single-day stock gain since 2013.
Analysts at Wedbush Securities described Tesla’s Q3 results as an “early Christmas present” for Tesla bulls, attributing the positive reaction to the company’s margin rebound and a surprisingly optimistic delivery outlook for 2025, with growth targets of 20% to 30%.
“Tesla delivered an early Christmas present for investors as the bulls got a monster margin rebound and a surprisingly strong delivery outlook for 2025, which we would characterize as an Aaron Judge-like quarter and guidance. Margins spike and 20%-30% delivery growth in 2025” – Dan Ives
Diversification beyond automobiles
While Tesla’s automotive segment continues to drive most of its revenue, its energy generation and storage division has emerged as a rapidly expanding business.
In Q3 2024, Tesla’s energy revenue reached nearly $2.4 billion, reflecting a 52% year-over-year increase. This division now contributes approximately 10% of Tesla’s total revenue, fueled by robust sales of solar panels and energy storage solutions like the Megapack and Powerwall.
During the earnings call, Elon Musk emphasized the “gigantic opportunity” presented by the energy business, hinting at its growing importance to Tesla’s long-term growth strategy.
Risks and caveats
Despite Tesla’s stellar Q3 performance, some analysts advise caution, citing potentially unsustainable revenue drivers. JPMorgan highlighted Tesla’s reliance on regulatory credits, which brought in $739 million during Q3. As more automakers ramp up their electric vehicle (EV) production, Tesla’s advantage from these credits may wane, potentially impacting future earnings.
Additional concerns include the sustainability of Tesla’s working capital benefits and uncertainties surrounding key projects like Full Self-Driving (FSD), the Optimus humanoid robot, and new vehicle models.
These ambitious projects face development and regulatory challenges, adding an element of risk to Tesla’s growth story.
Can Tesla hit $380?
With strong Q3 earnings, favorable technical indicators, and a rapidly expanding energy segment, Tesla seems well-positioned for sustained growth. However, investors should remain aware of potential challenges.
Tesla’s journey to $380 will hinge on its ability to sustain both its automotive leadership and the growth of its energy business, further securing its position in the EV market.
