Tesla Stock Surges 93% in 2024: Key Metrics to Watch for a Sell Signal
Tesla is up 93% this year and the post-election rally has added $735 billion to the company’s market cap.
Coming into Wednesday trading, shares were at $464.98, down 3.1% premarket after gaining 10% on Monday and Tuesday. Despite the small pullback, the stock is 40% above the average analyst target of $290 according to FactSet.
Tesla tends to trade above analyst targets. Over the past few years the stock has spent about 60% of the time above these targets, more than peers like Nvidia which is only about 10% above its targets. So some investors are wondering when to sell but history has some lessons.
When Analyst Targets Predict Growth or Decline
Tesla’s relationship with analyst targets reveals a bigger trend: turns in sentiment matter more than targets. For example:
- April 2022: Targets were at $350 and buying then resulted in a 40% loss over the next 12 months.
- December 2022: Tesla was 120% below its average target at $270 and buying then yielded over 100% returns in the next year.
So instead of looking at Tesla’s price relative to targets, investors should be watching when Wall Street raises or lowers its expectations.
The average analyst target price for Tesla has risen $110 since spring lows but is still $60 below the all time high. So upward revisions may continue and Tesla is still in bull mode for now.
How to Navigate Tesla’s Continuing Rally
Tesla’s stock is still volatile and timing a sell is hard. Here are some things to watch:
- Wall Street Sentiment: Look for a slowdown in upward revisions of analyst targets, means price may stall.
- Historical Trends: Tesla’s stock tends to do well after big gaps between its price and average analyst targets.
- Broader Market: As the S&P 500 and Dow Jones are up modestly, Tesla’s stock may be sensitive to the macro.
Also, Tesla’s ability to bounce back after big declines makes it a unique asset for long term investors. Near term volatility may be tough but the stock is aligned with EV growth and innovation driven strategies so it’s long term value is solid.
Key Takeaways:
- Tesla stock is up 93% year-to-date, trading 40% above analyst targets.
- Peaks in analyst price targets often signal short-term declines.
- Monitoring Wall Street sentiment shifts is key to navigating Tesla’s volatility.
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