Tesla Stock’s Incredible Two-Week Rally Ends on Wednesday With Price Drop
Key takeaways
- Tesla stock broke its own rally record and hit 13 days of gains in a row, crashing to an end on Wednesday
- The share price gained 40% during the rally and added $240 billion to Tesla’s market cap
- Tesla stock is in serious overbought territory, but analysts have massively upgraded target prices
Tesla stock has been on a tear the past fortnight, breaking its own rally record to finish $240 billion more valuable than when it started. That’s quite the increase. It stemmed from a string of good news headlines for the company, but many investors are holding their breath on how long the good times can continue for the stock.
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What’s been going on with Tesla’s stock?
Tesla CEO Elon Musk must be pretty happy right now. Tesla’s share price skyrocketed 40% and broke its rally streak, adding roughly $240 billion to the market capitalization — nearly the entirety of Toyota’s market cap.
The party was finally over on Wednesday when Tesla stock closed slightly down by 0.7% to $256.79. The 13-day rally has cost short sellers $7 billion, taking year-to-date losses up to $12.7 billion, according to S3 Partners.
Why did the incredible performance happen? A few reasons:
- EV rivals Ford and GM are partnering with Tesla to use the latter’s Supercharger EV charging station network and adopting Tesla’s charger design as the standard
- Tesla is gearing up to make 350,000 Cyber Trucks a year, beating production expectations
- All versions of Tesla’s Model 3 EV now qualify for tax breaks
- Twitter’s new CEO is officially installed, leaving Musk with more time to focus on Tesla
What does the future of Tesla stock look like?
With Tesla stock rising 53.6% in a month and a whopping 136.7% this year, many investors wonder how much further the stock can go — or if this is the peak. Tesla is Relative Strength Index score hit 88.46 on Tuesday before the rally ended, indicating the stock is wildly overbought.
That could be a boon for the stock — the RSI isn’t always predictive that a stock will drop in value — but it does suggest buyers should be cautious moving forward as they may be buying at the peak.
Wedbush has put its target price for the stock up to $300 from $215, while Daiwa analysts bumped up the target to $285. The reason is multi-faceted: Tesla has its fingers in many pies, including AI, EV charging, insurance and software. It could just be the beginning as investors catch on to how far Tesla can stretch its capabilities.
The bottom line
It seems Tesla can do no wrong right now. The stock is red hot, but investors are still piling in — especially as the Ford and GM announcement reminded Wall Street institutions that Tesla is more than just EV sales. Still, anyone looking to get in on the hype should observe the RSI score.
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