Tesla (TSLA) stock surged to $278.39 in after-hours trading on March 24, 2024, marking an impressive 11.93% gain during the day, with an additional 0.31% increase post-market. This significant rally not only snapped Tesla’s nine-week losing streak but also signaled a robust resurgence of market confidence in the electric vehicle (EV) giant. From both a technical and fundamental perspective, Tesla is at a pivotal turning point, poised for a strong upward trajectory in the coming months. Here’s why I’m strongly bullish on Tesla.
1. Full Self-Driving (FSD) Rollout to Unlock New Growth Avenues
According to Reuters, Tesla is set to launch its highest-level driver assistance product, Full Self-Driving (FSD), in China, the world’s largest EV market. This development, reported via local social media posts from Tesla employees, is a major catalyst for the recent stock surge. FSD, a cutting-edge technology, is expected to enhance the appeal of Tesla vehicles, potentially driving higher sales. While Tesla charges several thousand dollars for its driver-assistance features—unlike competitors like BYD, which offers similar features for free—Chinese consumers’ willingness to pay for FSD will be a key metric for investors to watch in the coming months.
Beyond China, Tesla is also expected to roll out FSD in Europe later this year, further expanding its global footprint. FSD not only boosts vehicle sales but also opens a high-margin, recurring revenue stream through subscriptions. With Tesla planning to launch a Robotaxi service in 2025, the successful deployment of FSD will be a critical stepping stone, unlocking a transformative new business model and significant growth potential.
2. Technical Analysis Signals a Trend Reversal with Breakout Momentum
From a technical perspective, Tesla’s stock is showing strong signs of a trend reversal. The daily chart indicates that the stock has broken above the key level of $217.02 and is approaching the resistance at $259.34, with a clear “showing an upward trend” signal. Although the current price of $278.39 remains below the 30-day moving average (MA30: $288.31), the significant volume and price action on March 24 suggest that bullish momentum is building, potentially paving the way for a break above higher resistance levels, such as $328.38 or even $439.74.
Additionally, the chart’s “E” and “B” markers likely indicate buy signals from technical indicators (e.g., MACD or RSI), reinforcing the potential for a sustained uptrend. After nine consecutive weeks of declines, Tesla’s stock has likely priced in much of the negative sentiment, making the current valuation an attractive entry point for investors.
3. Market Sentiment Rebounds with Policy Tailwinds Still in Play
Tesla’s stock soared from $250 to $490 between the November 5, 2023, U.S. election and mid-December, driven by expectations that the second Trump administration would benefit the automaker through regulations facilitating self-driving car adoption. However, since the January 2024 inauguration, concerns over CEO Elon Musk’s political activities potentially alienating Tesla’s traditional customer base—politically left-leaning, eco-conscious buyers—have weighed on the stock, contributing to its recent slide.
The March 24 rally, however, signals a shift in market sentiment. Musk’s recent hosting of a Tesla employee meeting has reassured investors, as noted by Gary Black, co-founder of Future Fund Active ETF: “Investors roundly cheered Elon’s vision, confidence, spirit, and calmness in praising employees for their efforts during the current media story.” By refocusing on Tesla’s core business rather than his Washington, D.C. responsibilities, Musk has reignited investor confidence.
Moreover, while the full benefits of the Trump administration’s policies are yet to materialize, the potential for regulatory support for autonomous driving remains a significant tailwind. As a leader in self-driving technology, Tesla is well-positioned to capitalize on a more favorable policy environment, particularly for its Robotaxi ambitions.
4. Upcoming Sales Data and Model Y Upgrade to Boost Expectations
Tesla is set to report its Q1 2024 sales results on April 2, with Wall Street expecting deliveries of 414,000 vehicles, though more recent analyst estimates have adjusted to around 360,000—below the 387,000 vehicles delivered in Q1 2023. Part of this decline can be attributed to the model changeover for the Model Y, as Tesla rolls out an upgraded version of its best-selling vehicle. This refresh is expected to enhance the Model Y’s competitiveness, particularly in Europe.
The European Automobile Manufacturers’ Association will also release monthly sales data later this week. While Tesla’s European sales dropped 45% year-over-year in January, the Model Y upgrade and the FSD rollout in Europe are likely to drive a recovery in the coming quarters. Combined with the potential for FSD sales in China, Tesla’s global sales outlook remains promising.
5. Attractive Valuation with Long-Term Growth Potential
After nine weeks of declines, Tesla’s stock is roughly flat since the election, offering an attractive valuation compared to its historical highs. As the leader in the EV industry, Tesla boasts a strong brand, technological moat, and long-term growth opportunities in energy storage, AI, and autonomous driving. Musk’s vision and execution track record further solidify Tesla’s position as a top growth stock.
Conclusion: Strong Buy with a $400 Price Target
Tesla is at the cusp of a major breakout, driven by the global rollout of FSD, the Model Y upgrade, a rebound in market sentiment, and potential policy tailwinds. From a technical perspective, the stock is showing clear signs of a trend reversal, with the potential to break above $300 in the near term and target $400 in the coming months.
For investors, now is an opportune time to build a position in Tesla. I strongly recommend buying TSLA stock to capitalize on this emerging uptrend and the company’s transformative growth potential.
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