Tesla Paves Path to Become 'OPEC' of Electric Vehicle Era

Let's look at the automaker's sudden shift forward and a roadmap for investors.

Autos were driving ahead on Thursday, and Tesla ( TSLA) was at the wheel -- and now it might just be able to steer the entire industry.

 

Within the hot-running consumer discretionary sector on Thursday, automobiles were leading. The Dow Jones U.S. Automobile Index gained 3.73% for the session. True, Vroom ( VRM)  was the top performer, but that was part of a short squeeze that gripped certain stocks on Thursday. The best performing large cap name in that index was ... Tesla. Tesla gained a stunning 4.58% to put in a tenth consecutive "up" day. Tesla is now up 31.8% from the low of May 24, which is still Tesla's last "down" day. Whoa, baby. 

What's Driving the News?

There's been plenty of news. The first day of this winning streak was the day that Ford Motor (F)  struck a deal with Tesla to gain access to the more than 12,000 Tesla Superchargers customers across North America. Since then, Ark Invest's Cathie Wood said she believed Tesla's Cybertruck could disrupt the retail truck market. Elon Musk regained his title as the world's richest person from Bernard Arnault of LVMH (LVMH) . Tesla sales in China grew 141.55% year-over-year for May. Panasonic Holdings (PCRFY)  accelerated plans to expand production of electric batteries at its facility in Nevada that is jointly operated with Tesla.

Tesla is positioning itself as the "OPEC'' of the electric vehicle era.

And now, this: General Motors (GM)  is collaborating with Tesla to integrate the North American Charging Standard connector design into its electric vehicles beginning in 2025. So, Tesla's standard becomes the standard. This means Ford and GM will line up at Tesla Superchargers as Tesla not only maintains its lead as the industry leader in the manufacture and provision of electric vehicles, but is positioning itself as the "OPEC '' of the electric vehicle era. If Tesla can not sell or lease you an electric vehicle, and you go somewhere else for that product, Tesla will darned sure sell you the electricity you need to keep on moving. Exxon (XOM)  and Chevron (CVX)  ... meet Tesla, your competitor as charging stations evolve into the gas stations of if not this decade, then the next. 

My Take

I happen to be long this name. No, I am not the true believer that some Tesla fans are. I trade the name from both the long and the short side. I have noticed over time that I trade this issue better from the long side than I do the short side. I bought these shares a little less than a month ago for an average price of $172.41, so with the shares up another 6% this morning ($249 handle), I am up a cool 44%. Not bad for about four weeks of work. so, what now? Earnings are not until July 20. 

 

 

Readers will see that what had been staunch support for TSLA in May and June of 2022, had turned into stiff resistance in February through April 2023. In the meantime, this level represents the half-way back point of the September 2022 through January 2023 selloff. Half-way back points are not true Fibonacci levels, but they do work. 

       

The stock has now broken out from that half-way back point. I do not expect this winning streak to last forever. I certainly see my first level target price of $248 as achievable today. Then we have to wonder if what we see from last September through the present is an inverse head and shoulders pattern. Granted the shoulders are not very symmetrical, but if we see this, the TSLA could be off to the races. That would signal a further upside move. Dan Ives of Wedbush just put a $300 target price on this stock. That's not crazy. Meanwhile, I will drag my panic point up to the trailing 21-day exponential moving average, which is currently at $202. This way we lock in the victory. 

 

At the time of publication, Guilfoyle was long TSLA equity.