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25

October, 2018

Is Tesla’s Blowout Quarter Just The Beginning?

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Summary:

With Tesla stock in the 250’s just a couple of weeks ago, Wall Street had an incredibly bearish tilt towards the company.  Some hedge funds were saying Tesla would be bankrupt within months, and most analysts maintained a dismal outlook for the company based on CEO Elon Musk’s erratic tweeting and the company’s upcoming debt obligations.

On October 9, LikeFolio issued a Bullish Opportunity Alert on TSLA, citing the following chart of purchase intent mentions for the Tesla Model 3:

Tesla Model 3 Demand
Consumer Demand for the Tesla Model 3 is surging

This surging demand for Model 3’s is an extremely important metric for a few reasons:

  1. It suggests that Tesla will be selling as many Model 3’s as it can make for a long time to come.
  2. Almost eliminates the likelihood that Tesla will be forced to lower the price of the car in order to move units, a financing concern that Jeffries Analysts have surfaced in a note to clients.
  3. Increases the odds that Tesla will not need to raise money (through dilution or unattractive refinancing) to meet upcoming debt obligations.

In the bullish note on Oct 9., LikeFolio Members were also linked to the following view from the powerful LikeFolio Research Dashboard:

Tesla Consumer Demand
365 day moving average of Tesla Purchase Intent Mentions

With Tesla, our comprehensive backtest of purchase intent signals has shown that the 365 day moving average of PI mentions is the most effective at predicting the stock’s next move.

In fact, Tesla is one of the best performing companies on our coverage list, with consumer purchase intent sporting a 0.94 correlation to reported revenue and a massive average gain of 8% per earnings prediction.

Will The Tesla Boom Last?

Yesterday Tesla reported a blowout quarter, surging to profitability and shocking Wall Street analysts.  

The stock is currently up nearly $50/share from our Oct. 9 bullish alert, which now has members wondering if it’s time to take profits or hold on for more.

The best approach is to stick to what’s working.  We’ll be keeping a close eye on Tesla consumer purchase intent mentions over the next quarter.  If the company can maintain the unbelievably strong growth in consumer demand for its Model 3, there is reason to believe TSLA could be a $500 or $600 stock in 2019.

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