As Tesla targets China for energy business, is it time to buy?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jun 23, 2021
  • Tesla says it opened a charging station in China.
  • The station will generate power from sunlight in its storage facilities.
  • TSLA stock looks overpriced buy investors are excited by earnings growth potential.

Tesla Inc. (NASDAQ:TSLA) said it opened a fully-featured charging station in China. TSLA is looking to develop an energy business in China. The company said its charging station would generate power from sunlight and store it in its storage facilities.

Fundamentals overview: energy business augments TSLA’s EV business in China

From a fundamental perspective, Tesla’s entry into China’s energy market will augment its electric vehicles business. The company is building a second gigafactory (a lithium battery manufacturing plant) in the Asian country that also beds well with its EV business.

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From a valuation perspective, TSLA shares look massively overpriced at a P/E ratio of 651.91. However, investors seem to be betting on the company’s potential for growth. Analysts expect earnings to grow by 165% this year. The bottom line will also experience an average increase of 44.52% in each of the next five years. Therefore, with shares falling nearly 12% this year, it could be time to buy.

Source – TradingView

Technical overview: TSLA rebound looks solid

Tesla shares extended the current rebound on Wednesday to $654.52. The stock is yet to touch the 100-day MA. Therefore, investors can target extended rebounds at $718.08 and $785.41. The key support levels are $605.46 and $535.68.

Bottom line: Now could be a perfect time to buy TSLA stock

Tesla stock has pulled back in recent trading sessions to open up an opportunity to invest in the highly disruptive company. Its latest announcements beds well with its overall business goals. Now could be a great time to buy TSLA shares.

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