Tesla stock breaks above $265 resistance, historic TSLA rally continues through day two

Tesla stock garners another 3% day after historic rally.
TSLA stock rose the most in one day on Thursday since May 2014.
Tesla shares rose 21.9% on Thursday but fell short of stubborn $265 level.
Q3 margins improve notably as Tesla becomes more efficient at production.

Clay Webster FXStreet

Tesla (TSLA) stock has overcome the much-watched $265 level on Friday, one day after it proved stubborn in the face of the previous session’s rally. On Thursday, Tesla shares had their strongest one-day rally in the past decade. Tesla stock spiked 21.9% on Thursday after the electric vehicle (EV) maker headed by Elon Musk third-quarter earnings that improved margins by shrinking costs.

Tesla also beat the bottom line Wall Street consensus figure. Musk’s company earned $0.72 in adjusted earnings per share (EPS) and $0.62 in GAAP EPS. Both figures were 12 cents above their average estimates. Revenue of $25.18 billion, however, missed the consensus target by $315 million or 1.2%.

TSLA stock has gained some 3% near the middle of Friday’s trading session.

Tesla stock news

Tesla’s stock price hasn’t risen percentage-wise as much as Thursday’s performance in one session since May 2013, more than 11 years ago.

The market especially loved that margins improved in the auto division. Tesla’s internal numbers show that the automotive ex-credits gross margin rate reached 17.1% in the quarter, a healthy jump from the 15.1% consensus estimate. Tesla’s operating margin surged from 6.3% in the previous quarter to 10.8% of sales in Q3.

Musk said that production cost savings were beginning to trickle down in a measurable amount. He gestured toward producing more cheaper models in 2025 but noted clearly that Tesla is a company focused on autonomy. Musk added that he estimates Tesla will grow production by 20% to 30% overall in 2025.

In his typical braggadocio, Musk hinted that its newly-introduced cybercab, an autonomous taxi cab vehicle, will likely begin scaling higher in 2026. He added that Pepsi drivers in a partnership test prefer the Tesla Semi to other options.

Garrett Nelson, an analyst at CFRA, was unimpressed. He hasn’t forgotten that Tesla missed on the bottom line in the four consecutive previous quarters and wonders if the consensus estimate that Tesla will see earnings rise 80% between 2024 and 2026 is too pollyannaish.

Wedbush Securities' Dan Ives thought it was impressive that Tesla could cut prices so drastically and still improve margins. It hints Tesla might still have strong pricing power.

Tesla stock forecast

Tesla shares broke above the $265 resistance level on Friday afternoon, reaching into $267. This aggressive price action tells us that shares of the automaker are not finished with this rally.

The $265 level worked as strong resistance on five occasions since October of last year. The July 11 high at $271 still needs to be overcome though. A break above there will make the market think that the September 2023 high near $279 is possible.

Support sits at $235 and $246 for Tesla.

TSLA daily stock chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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