Tesla rebounds from $1,000 as investors buy the dip. The technical picture looks bullish as the price holds above $1,000, and competitors concede that Tesla is setting the benchmark for electric vehicles.
During the COVID-19 pandemic, one company has diverged from all others – Tesla. Its stock price hit new all-time highs in 2021, trading near the level of around $1,000 and then breaking through resistance.
It was trading above $1,200 before Elon Musk, its charismatic CEO, announced that he would sell shares to pay taxes due in 2022. The announcement triggered a correction, but the price of the action is still holding above the critical support zone.
Tesla’s stock price rally seems excessive for a company that pays no dividends and trades at exorbitant valuations. However, both technical and fundamental factors favor the upside.
Tesla stock remains bullish as it breaks above $1,000
From left to right, the daily chart below shows price action over the past year. Tesla bulls pushed against the resistance seen at $900, but the market failed on its first attempt higher.
However, during its move down, the stock only built energy for another resistance attempt. The second time, in late 2021, it blew through resistance, triggering stops above $1,000 and not stopping until trading above $1,200.
Currently, the stock price has strong support at $900 (i.e. previous resistance) and strong resistance at $1,200. As such, the round figure of $1,000 has become a pivotal level, and while above it, Tesla stock price remains bullish.
VW CEO admits Tesla is the benchmark for electric vehicles today
To all Tesla haters, an article published by CNBC at the end of 2021 has revealed the fact that competitors agree that Tesla is the benchmark in the electric vehicle market. Herbert Diess, CEO of Volkswagen, praised Tesla.
First, he pointed out that Tesla builds the car around its software, not the other way around. As such, Tesla sets the standard for software – competitors must follow.
Second, Tesla’s productivity exceeds that of Volkswagen. For example, Tesla wants to build 90 cars per hour, much more than Volkswagen does at its Zwickau factory.
Finally, the Tesla brand. The company’s Model 3 was the best-selling car in Europe last September, without Tesla building any cars in the old continent.
In summary, Tesla is the benchmark in the electric vehicle market, and competitors are well aware of this. Therefore, the more investors think Tesla will succeed with its long-term plans, the higher the stock price will be.