Following a substantial 5.34% rally on Friday to the latest closing price of $389.22, Tesla Motors (NASDAQ: TSLA) appeared poised to open on Monday, December 9, above $400 for the first time since 2021.
In fact, overnight trading featured a brief climb above the important price level, leading Elon Musk to mock TSLA stock short sellers on X, saying they were ‘reciting Litany Against Fear’ at the time.
By press time, however, the extended session upside has diminished, and it appears that $400 will remain an unsustainable target for some time. Nonetheless, the climb and the overall optimism have set the price as a plausible target and raised the question of whether TSLA can finally find a footing above it in the second week of December.
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Is Tesla set to close above $400 this week?
The big catalysts of the Friday and weekend surges certainly indicate that Tesla could rally above $400 in the coming days and perhaps even aim for a new all-time high (ATH) as, given the press time prices, the feat is a mere $15 – 3.8% – away.
Specifically, Thursday and Friday featured something of a deluge of analyst assessment upgrades as Bank of America (NYSE: BAC), Fubon, and Deutsche Bank all upgraded their forecasts.
Of these, BofA and Deutsche were, arguably, the most significant as the former set its new price target at $400 – the Street high at the time – and the latter offered a massive upgrade from $295 to $370.
While the new price targets drove much of the investor optimism, analysts themselves were particularly impressed by the performance of the Texas gigafactory and the refinement evident in version 13.2 of Tesla’s self-driving software (FSD).
Finally, a recent rumor that Elon Musk’s electric vehicle (EV) maker will finally launch its long-awaited low-cost model – dubbed the ‘Model Q’ – in the first half of 2025 could make the upside even greater. It could push TSLA shares above $400 this week if there is further confirmation.
Why Tesla stock’s recent rally may precipitate a TSLA fall
On the other hand, it is worth pointing out that $400 might still be out of reach for Tesla stock – at least during the regular session – even with the positive catalysts. At the very basic level, TSLA’s strong recent rally might lead to a relatively typical phase of corrections and consolidation.
Additionally, optimism about the recent rumors and updates could quickly turn sour. It is worth pointing out that the $30,000 Tesla model has been speculated as ‘imminent’ for over a year. The same can be said about the FSD, as it has been due ‘next year’ for approximately a decade.
Tesla’s self-driving advancements, in particular, could eventually prove a double-edged sword. At press time on December 9, there were multiple allegations that its failures had led to fatal accidents. While Elon Musk’s role in the Trump administration could reduce regulatory pressure, the anticipated deregulation may eventually return to haunt the billionaire and the public.
Furthermore, as Gordon Johnson—the most prominent and shocking Tesla bear—previously explained, TSLA stock highs were the result of a relatively unique set of circumstances amidst global supply chain disruptions. These disruptions led to Elon Musk’s EV maker effectively being the only firm to service its specific market for a time, making a resurgence to ATH unlikely.
Still, as the shares’ recent performance proves, Johnson’s bearishness has been misplaced through much of 2024, even if based on Tesla’s historical failures.
Finally, TSLA stock might face its strongest headwinds from the anticipated trade war with China. Specifically, the People’s Republic has already proven its willingness to fire back with a poignant ban on the export of ‘dual-use’ materials commonly applied in the semiconductor industry.
Featured image via Shutterstock
