Should you buy Tesla stock as shares rise on record deliveries?

on Oct 4, 2021
  • Tesla shares on Monday edged higher more than 2% after announcing record EV sales.
  • The company delivered over 241,000 vehicles in Q3, beating analyst expectations.
  • Wedbush Securities analysts expect the growth to continue in Q4 amid a ramp-up in demand in China.

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On Monday, Tesla Inc. (NASDAQ:TSLA) shares surged more than 2% after announcing its most recent quarterly deliveries. The company said it delivered more than 241,000 vehicles in Q3, beating analyst expectations.

Wedbush Securities analyst, Dan Ives, expects the electric automaker’s deliveries to continue growing in Q4 amid increased Chinese demand. Tesla’s impressive shipments come at a time when automakers suffered from supply chain constraints created by chip shortage.

The stock is now up 40% since 19th May, but its year-to-date gain of just over 8% is still underperforming the S&P 500 index.

Tesla’s growth prospects 

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From a valuation perspective, Tesla shares look potentially overvalued based on the stock’s trailing 12-month P/E ratio of 413.97. However, its forward P/E of 108.88 is more reasonable given its exciting growth prospects.

The company’s earnings per share could grow by 165% this year before rising at an average annual rate of nearly 52%. As a result, Tesla looks like a compelling growth stock for long-term investors.

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Therefore, with deliveries expected to remain solid in the coming quarters amid the China demand and the company underperforming the S&P 500 index, it may not be too late to invest in TSLA shares.

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Source – TradingView

The TSLA bull-run looks solid

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Technically, Tesla shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock has surged closer to the overbought conditions of the 14-day RSI, creating an opportunity for a pullback.

However, with TSLA yet to retest the trendline resistance, the current bull-run could continue for the foreseeable future. 

Therefore, investors could target extended gains at about $840.44 or higher at $889.41. On the other hand, $733.30 and $681.71 are crucial support zones.

It could be time to invest in TSLA stock

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In summary, although Tesla shares are up 40% over the last four and a half months, the stock still enjoys strong bullish momentum, thereby backing the current trend to continue.

Moreover, with analysts expecting its earnings per share to grow significantly in the coming years, it could be time to buy the stock before the share price spikes.


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