Talking Numbers

Why Tesla's stock could gain another 17%

Talking Numbers

Why Tesla's stock could gain another 17%

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Why Tesla's stock could gain another 17%

Why Tesla's stock could gain another 17%
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Tesla’s drive continues.

The electric carmaker’s stock has hit all-time highs, closing August at $269.70 per share and valuing the company at $33.6 billion. Tesla announced a deal with China Unicom to build 400 charging stations in the world’s most populous country.

But is Tesla just too expensive now?

Erin Gibbs, equity chief investment officer for S&P Capital IQ Global Markets Intelligence, is not looking to buy Tesla’s stock at these levels. Gibbs, who has $12 billion in assets under her advisory, doesn’t hold shares in Tesla.

“It’s trading at $30 above the Wall Street average target price,” Gibbs notes. “Right now, most of Wall Street has a target price at $240. So for me, it’s a little too pricey.”

Though she said Tesla’s revenue may grow at a rate of 50 percent for the next five years, Gibbs suggests that anyone looking to purchase shares hold off. “Considering how volatile this stock is, it’s quite easy enough to wait until you get a downturn and pick it up at a more attractive valuation,” she said.

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However, Mark Newton, chief technical analyst at Greywolf Execution Partners, thinks the charts show reason to be enthusiastic about Tesla.

“The stock is off to the races yet again,” Newton said. “I’m bullish on Tesla.”

Newton sees a lot of upside to Tesla’s share price. “I think it could get up to $280, which is at least 3 percent above current levels with a possibility of $295 and actually $326,” he said, adding that two charts support his view.

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“When you look at a daily basis [chart], you see that the stock is getting up above the levels from August and from this past February,” said Newton. “You’re going to see short covering on a move to new highs as well as people that attempt to buy the breakouts.”

The weekly chart shows why he believes the stock could hit as high as $326. He notes that the stock more than doubled from late November to late February before retracing down to around $178 per share in May. Doubling from that point would get share prices in the mid-$300 range.

“Even though it’s a bit overbought, it still looks to go higher,” Newton said.

To see the full discussion on Tesla, with Gibbs on the fundamentals and Newton on the technicals, watch the above video.

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