The shares of electric vehicle giant Tesla (TSLA) have been cooling off from their Jan. 25, all-time high of $900.40, though yesterday’s session saw the equity mount a comeback attempt. In fact, TSLA climbed as high as $872 before falling and ultimately logging its third-consecutive close below $720. And while Tesla stock is hovering just below its year-to-date breakeven level, its recent pullback has it trading near a trendline with historically bullish implications.
More specifically, the security just came within one standard deviation of its 80-day moving average, after spending a considerable amount of time above this key trendline. According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, three similar signals have occurred during the past three years. In 67% of those instances, the equity enjoyed a positive return one month later, averaging a 19.7% gain. From its current perch of $703.95, a move of similar magnitude would put TSLA just above $842.
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Analysts are currently pessimistic toward the equity, leaving ample room for upgrades moving forward. Of the 20 analysts in coverage, 14 carry a tepid “hold” or worse rating. Plus, the 12-month consensus target price of $607.76 is a 14% discount to current levels. Meanwhile, despite the short sellers’ mad dash for the exits, there’s still plenty of pessimism left to be unwound. Short interest dropped 15.4% during the last two reporting periods, but the 11.62 million shares sold short still make up a whopping 26.6% of stock’s available float.
Lastly, premiums are reasonably priced at the moment, per the stock’s Schaeffer’s Volatility Index (SVI) of 62%, which sits in the 10th percentile of readings from the past year. This indicates options players are pricing in relatively low volatility expectations. Furthermore, the security’s Schaeffer’s Volatility Scorecard (SVS) sits at an elevated 99 out of 100, meaning TSLA has exceeded option traders’ volatility expectations during the past year.
