Is Tesla stock a buy as it reports record China sales?

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 Oct 12, 2021
  • Tesla shares on Tuesday surged more than 2% following its latest monthly sales report.
  • The company delivered record China sales during September, recording M/M growth of 26.5%.
  • It exported 3,853 EVs from its Shanghai factory last month, marking two years since it started production.

On Tuesday, Tesla Inc. (NASDAQ:TSLA) shares edged higher over 2% following its latest monthly sales report. The company said its EV sales from China grew by 26.5% in September to a record 56,006 from 44,264 reported for August.

The rapid growth of sales is in tandem with the company’s global Q3 sales, which came in at 241,300, as reported earlier this month

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According to the China Passenger Car Association, Tesla exported 3,853 vehicles from its Shanghai factory two years after it started production.

The stock has been up more than 40% since the start of June and over 82% in the last 12 months.

Time to bet on Tesla stock?

Despite Tesla’s steep P/E ratio of 423, it is still one of the best high-growth stocks in the market. Analysts expect its EPS to grow by 165% this year before rising at an average annual rate of 51% over the next five years.

Therefore, although value investors may opt for alternatives in the market, growth investors would be excited by Tesla’s long-term outlook. 

Therefore, investors willing to overlook the steep valuation multiples could be rewarded with significant returns in the long term.

Source – TradingView

Is a retest of year-to-date highs possible?

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

Therefore, a pullback seems inevitable. However, given the exciting earnings growth prospects, the current bull run could continue to the foreseeable future. 

As a result, investors could target extended gains at about $854.36 or higher at $896.37. On the other hand, if the stock pulls back after reaching overbought conditions, it could find support at $768.10 or lower at $728.12.

Tesla looks like a solid buy

In summary, although Tesla shares trade at steep valuation multiples, the stock is still down more than 8% from its January highs.

Therefore, with analysts predicting strong earnings growth and the company steadily growing EV sales, it could be time to buy the stock before the price advances higher.

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