Shares of Tesla rallied again yesterday to hit a fresh record high of $594.50. Although the stock price retreated lower in the second part of the U.S. session, it was still enough to close the day above the $555 mark, which values the company at $100 billion.
Fundamental analysis: Musk nears big payout
Tesla stock price has risen dramatically in the last 3 months. Compared to the beginning of October, the stock price increased at an unbelievable pace, rising 165% to the day. Analysts are in awe of Tesla’s recent rally, while continuing to praise Tesla’s CEO Elon Musk.
“There is no doubt that Elon Musk is a charismatic, brilliant salesman, and he has built a solid brand. For the first time, I think he has a really good shot [of building a lasting car company]. He has stopped the more outrageous aspects of his behaviour and is dedicating more attention to the business,” said Bob Lutz, a former top executive at all three of the big US carmakers and a longtime outspoken critic of the Tesla boss.
Analysts were focusing on the $100 billion market capitalization mark, as that number is inserted in Elon Musk’s contract. The media reported that Musk needs Tesla to be valued at $100 billion on an average basis for at least six months, in order for him to receive a $350 million payout.
Under the terms of his existing contract, signed in 2018, Musk receives no salary or other compensation except these bonuses. His other payouts are tied to every $50 billion increase in Tesla’s value.
His current stake at Tesla is just below 19%, which, according to the current market capitalization, translates to $19.3 billion.
Tesla is due to report its fourth-quarter earnings after the market close on Jan. 29.
Technical analysis: A correction more than possible
As outlined earlier, Tesla stock price gained a whopping 165% in three and a half months. Analysts have been expecting a price correction for more than a month now, however, the electric car giant has continued to march higher.
However, yesterday’s candlestick signals that we may retreat lower in the coming days and weeks. As seen in the chart, although the price action printed numbers above $590, the stock closed the day at $569.56. This situation signals that early investors used yesterday’s move as a profit-making opportunity.
If Tesla’s yesterday high was a short-term peak, the stock price may correct below the $500 mark in the near future. The first retracement level is at $496, just above the ascending trend line (the purple line) at $470. In the mid-term, the key support is located around the $390 mark, where the series of previous peaks is located.
Yesterday’s push in Tesla stock price has pushed the company above the much-anticipated $100 billion valuation. Tesla has to be valued at $100 billion on an average basis for at least six months for Musk to receive a $350 million payout. However, the daily close signals that the stock price may correct lower in the near-term.