Tesla Stock Could Hit $900 in Its Latest Surge

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Tesla

stock is on one of its hot streaks again. Shares are climbing Friday, putting them on pace to close higher for the eighth consecutive trading session. And if the stock can get through some resistance, $900 a share is in sight.

Early Friday,

Tesla

(ticker: TSLA) shares traded as high as $842.36. That would be the highest close since May 6, when the stock closed at $865.65.

The eight-day streak has added almost 20% to Tesla stock. It’s the best eight-day stretch since March, when shares added almost 21% over a similar span, according to Dow Jones Market Data.

Shares are up for a couple of reasons. For starters, the broader market is off its lows. The

Nasdaq Composite
has risen about 13% from its 52-week low hit in mid-June. Tesla stock is up about 30% over the same span.

Tesla shares are typically more volatile than the Nasdaq, rising faster in good times and falling faster in bad times. But the extent of the stock’s recent outperformance is surprising.

Earnings have helped as well. Tesla’s second-quarter financial results were better than expected, particularly after Covid-19 lockdowns in China resulted in lost production and lower vehicle deliveries.

Shares gained almost 10% during Thursday’s session. Investors appeared to feel better about the second half of 2022 after hearing from CEO Elon Musk on Tesla’s earnings conference call.

Tesla stock now sits just above its 100-day moving average of about $828 a share. If it can close higher than that, the next near-term target is about $909, says Katie Stockton, founder of Fairlead Strategies, a provider of technically focused stock research. That is the stock’s 200-day moving average.

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This is, of course, a technical observation and doesn’t have anything to do with fundamentals such as earnings or cash flow. But technical stock market patterns matter. There are groups of investors that watch them and trade accordingly.

Tesla stock is now down about 22% this year. The

S&P 500
and

Dow Jones Industrial Average
are off about 16% and 12%, respectively. Most automotive stocks have been hit harder than the market so far in 2022. Auto shares in the

Russell 3000 Index
are down about 31% year to date on average.

Tesla stock, however, has also had some company-specific issues. Shares are still down about 28% since Musk’s initial

Twitter

(TWTR) stake was disclosed, while the Nasdaq is off about 17% over the same span. That span includes two earnings “beats” from the company. It appears the

Twitter

saga is still an overhang for some Tesla investors.

The Twitter drama affects Tesla investors in a couple of ways. For starters, Twitter is suing Musk to complete the purchase. If Musk ends up owning the social medial platform, then it will be another job for Musk that could take some of his energy away from Tesla. And a Twitter purchase, or a large settlement that goes against Musk, means more cash—Musk could be forced to sell more Tesla stock. Shareholders don’t like insider sales or large blocks of stock hitting the market.

Any Twitter resolution is a fundamental factor that could drive shares in coming weeks. Investors should also watch the company’s August annual meeting, where shareholders will vote on a plan to increase the number of authorized shares. That paves the way for another stock split. And Tesla hosts its second artificial intelligence day in late September.

Investors shouldn’t forget about the Federal Reserve’s next interest-rate decision, either, which comes on July 27. Investors expect the Fed to raise rates by another 0.75 percentage point. Anything more or less would be a surprise.

Write to Al Root at [email protected]