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A Cybertruck production report could be behind the stock’s gains on Thursday.
Courtesy of Tesla
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the stock is again. Sometimes when the stock goes wild, finding a compelling explanation can be difficult. Thursday’s decision, however, seems rooted in the upcoming Cybertruck. However, not everyone agrees with this assessment.
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(ticker: TSLA) shares have had an incredible run recently, rising for a 10th straight day, up $10.29, or 4.6%, to $234.86. THE
S&P500
And
Nasdaq Compound
increased by 0.6% and 1% respectively.
The stock was the most active on the Nasdaq 100 index on Thursday, according to Dow Jones Market Data. Thursday’s close was the highest since Oct. 6, when the stock closed at $238.13. The 10-day streak has racked up gains of over 28%. And it’s the longest winning streak since Jan. 8, 2021, when Tesla stock rose for 11 straight trading days.
Shares rose about 15% in June and 90% for the year. Still, they are down about 43% from record highs of nearly $410 per share, levels reached in November 2021.
But why the rally now? Earnings are long gone, second quarter shipments aren’t due for weeks. Is it the Federal Reserve pause, the AI rally, or a new Twitter CEO? Maybe. But Cybertruck certainly had something to do with Thursday’s earnings.
Electrek reported Thursday that Tesla plans to produce 375,000 Cybertrucks per year. It is simply much more than what Wall Street expects. Analysts predict less than 100,000 units in 2024 and around 240,000 units by 2027. The 375,000 level is significant. Tesla sold approximately 252,000 Model Ys in the United States in 2022. The Cybertruck is primarily a North American product.
Tesla did not respond to a request for comment from Barrons on the production of Cybertruck.
The truck, unveiled in 2019, is expected to ship later this year. It will be built at Tesla’s factory in Austin, Texas.
There could be other reasons why Tesla stock is rallying.
Future Fund Active ETF
(FFND) Co-founder Gary Black conducted a Twitter poll on Thursday asking why the stock was rising. Cybertruck is third. The winning choice was reinstating the full $7,500 tax credit for Model 3 sedans. It happened earlier in the week.
black commented Barrons that Cybertruck’s potential volumes were significant. Still, with more than 10,000 votes, and retail investors presumably those voting on Twitter, it’s hard to ignore the lingering effects of the good news on the tax credit. Retail investors hold a higher percentage of Tesla stock than is typical for other megacap stocks.
Granted, Tesla’s stock looks stretched. The stock is well above its 200-day moving average of around $200 per share and the stock is considered overbought, which is a technical term that basically means a stock has risen a lot fast.
In practice, overbought stocks reflect a lot of good news, which is a short-term risk for any stock. Investors are not thinking about risk right now; they only think about the rewards of a new model that could be a big hit for the electric vehicle giant.
Write to Al Root at allen.root@dowjones.com