Tesla stock price hits record close on increased sales in China

Shares of Tesla (NASDAQ: TSLA) printed a record closing price of $949.92 yesterday after sales in China increased by 205% in May. The buyers are now likely to target a trip above the psychologically-important $1,000 mark.

Fundamental analysis: Car market recovers 

Tesla said it sold 11,095 Shanghai-made Model 3 vehicles in China in May. This is an increase od 205% compared to 3,635 units sold in April. In March, Tesla sold 10,160 Model 3 units, according to the China Passenger Car Association (CPCA).

The surge in sales signals that the car market is recovering. China is one of the most important markets for Tesla. 

“We believe that the China growth story is worth $300 per share to Tesla as this EV penetration is set to ramp significantly over the next 12 to 18 months in a more normalized backdrop. We maintain our neutral rating and $800 price target with our bull case target at $1,350,” JL Warren Capital researchers wrote.

Shanghai authorities were reportedly extremely supportive of Tesla when the electric car maker was fighting to reopen its gigafactory in China. According to the local reports, local authorities even donated personal protective equipment. 

“The sharp drop in the number of LR [long-range] orders in May is the result of a price cut of ~11% starting on May 1st for the M3 SR [short-range]. Due to Tesla’s whimsical pricing changes, Chinese consumers are delaying purchases hoping for further price cuts for LR [long-range] after July as the model will no longer eligible for a government subsidy,” they added.

Technical analysis: Bulls eyeing new record highs

Tesla stock price is on its way towards the new record high after setting a fresh all-time closing high at $949.92 yesterday. The buyers are now likely to target a trip north of $1,000, with Fibonacci extension pointing towards a potential move to $1,137. 

We may see a pullback to $870 first, as this is the previous resistance that will now act as a support and offer an opportunity to buy shares of the electric car maker. The mid-term target for Tesla bulls is the 161.8% Fibonacci extension at $1,350, as noted by JL Warren Capital.

Summary

Shares of Tesla set a record closing price yesterday after the latest numbers from China have confirmed that the car market has started to recover in May. The buyers are now likely to target a move towards $1,137 first and then $1,350 in the mid-term.