Tesla (TSLA) Chief Executive Elon Musk has defied big odds and consistently beat expectations since taking the helm of the electric vehicle manufacturer in 2008. Now, after an enormous runup fueled by several positive news reports, is Tesla stock a buy? As markets closed on Friday, Tesla was flashing several signs of a climax top amid a sharply vertical run over the last few weeks. On the same day, Tesla stock hit a record high at 884.49. Tesla stocks climbed as high as 88% from a 466 buy point in a cup with handle. In case you are wondering about Tesla stock and thinking about investing in it, read on to find out.

Tesla Stock (TSLA): What’s Going On With It?

Tesla’s stock gapped during the last three days of trading in the previous week. These stock jumps are considered exhaustion gaps and they usually happen at the end of a long run, when a stock opens above the prior day’s high. Once a stock has gone up for eight out of 10 days, a pullback is also usually imminent. At last week’s end, Tesla’s stock was on an 11-day winning streak. The runup in Tesla stock was partly due to its announcement on vehicle deliveries on Jan. 4, Tesla announced it delivered 189,750 electric vehicles in the fourth quarter, topping estimates of 174,000 and setting a new quarterly record. That brought total deliveries for the year to 499,550 in 2020. Wedbush analyst Dan Ives called the performance “a major feather in the cap for the company and the bulls as Tesla saw robust Model 3 demand over the last 10 months, despite Covid headwinds,” Ives wrote in a note to clients.

Ives also noted that Model Y production in China has begun, with deliveries expected to begin shortly.

“Heading into 2021, we are seeing a major inflection of EV demand globally with our expectations that electric vehicles ramp from about 3% of total auto sales today to 10% by 2025,” Ives wrote. “We believe this demand dynamic will disproportionately benefit the clear EV category leader Tesla over the next few years especially in the key China region.” Ives has a 12-month price target on Tesla stock of 715. Post the announcement of delivery, Tesla stock continued climbing upwards.

Has Tesla entered the Indian market?

Another thing that is going to increase some excitement in Tesla stock is the fact that the company has finally entered India. It registered as a firm in India’s IT capital, Bengaluru. 

Is Tesla a part of S&P Dow Jones index now?

Tesla’s inclusion in the S&P Dow Jones index has also helped fuel its stock rise since December 21st. Tesla accounts for 1.69% of the S&P 500, which makes it the fifth-largest weighting. It’s the sixth-largest company in the S&P when combining both of Alphabet’s (GOOGL) share classes, also trailing Apple (AAPL), Amazon (AMZN) Microsoft (MSFT) and Facebook (FB). Fund managers rushed in to buy shares to rebalance funds that are pegged to the benchmark index.

Tesla has undertaken a massive expansion of manufacturing.  Musk wants to eventually build 20 million electric vehicles a year over the next decade — more than double the current production of other auto-making giants — so it’s now on a mission to rapidly expand its manufacturing capabilities.

Tesla took a big step with its third manufacturing plant, where construction is now underway near Berlin. That plant is expected to be completed in March 2021, where it will produce the Model Y.

Musk confirmed the fourth manufacturing plant near the city of Austin, Texas. And quite poetically, the factory in Texas will be the largest factory of Tesla yet, sprawling across 2,000 acres. The factory is going to produce the Cybertruck and the Semi along with the Model Y and Model 3. However, Tesla recently said Cybertruck deliveries won’t begin until early 2022, later than official targets for a late 2021 launch.

List Of Tesla Competitors Growing

When Tesla starts pumping out cars in Germany, it will go head-to-head in electric vehicles with three established German names: Volkswagen Group (VWAGY), BMW (BMWYY) and the Mercedes Benz division of Daimler AG (DDAIF). With all these car makers renowned for their quality, Tesla will face an uphill battle.

Some of the other serious competition that Tesla is facing is coming from Ford Motor’s (F) Mustang Mach E, the I-PACE from Tata Motors’ (TATA) Jaguar unit and the Audi eTron. Audi is owned by Volkswagen. Porsche AG, which is also owned by Volkswagen, has also released the awesome Taycan which is going to knock hard on the doors of the performance electric car market.

While Tesla has entered the highly energetic market of China, it is facing tough competition over there as well. Some of Tesla’s rivals are Xpeng Motors (XPEV), backed by e-commerce giant Alibaba (BABA), Nio (NIO) and Li Auto (LI).

Electric vehicle sales are expected to grow by 40% to 1.8 million units in 2021 and reaching 6 million units in 2025

As Tesla’s manufacturing capacity is going to be bolstered by the Shanghai plant producing the Model Y crossover, the firm also raised roughly $5 billion in its third stock offering of the year. Tesla’s locally made Model 3 sedan ended up being the second best electric car in China in December.

Tesla Stock Gets High Composite Rating

Tesla’s incredible composite rating of 99 means that the Tesla stock currently outperforms 99% of all stocks in terms of the most important fundamental and technical stock-picking criteria.

The stock also has a Relative Strength Rating of 99. The rating tracks market leadership. It shows how a stock’s price movement over the last 52 weeks measures against that of other stocks.

On top of that, Tesla has an Accumulation/Distribution Rating of A-. That rating does the job of analyzing price and volume changes in a stock over a period of 13 weeks of trading. The current rating also indicates that more funds are being bought than sold. A grade of A signals heavy institutional buying. The lowest rating of E means heavy selling. Think of the C grade as neutral.

However, the drop in Tesla stock led to a slight drop in its relative strength line, which gauges a stock’s strength against all stocks in the S&P 500. Still, it’s near a record high. The RS line is the blue line in the chart shown. Typically, the RS line of the strongest stocks either confirms or leads a stock price into new territory.

In the stock market, timing is critical. So when you’re looking for stocks to buy or sell, it’s important to do the fundamental and technical analysis that identifies lower-risk entry points that also offer solid potential rewards.

Where is the Tesla stock expected to go?

Tesla stock is currently extended from its buy zone after breaking out of a cup with a handle with a buy point of 466. The buy point ranges up to 489.30, after which it’s considered extended. A stock is considered to be extended when its 5% above the proper entry point. It’s a technical term used to describe the point at which a stock is up in price over its pivot or buy point and is considered riskier to buy.

Why 5%? Following a breakout, many leading stocks tend to pull back to test their buy point or their 10-week moving averages. Setting the cutoff at 5% allows for such pullbacks without tripping the 7%-8% loss-cutting sell rule. If a stock falls 7% to 8% below your entry price, that’s an automatic sell signal.