Tesla Stock Price Forecast Ahead of Q1 Earnings This Week

Tesla stock price has staged a strong comeback in the past few days. This mirrored the broader equities market rally.

TSLA jumped to $410 on Friday, up by 20% above its lowest level this year. This rally will be put to the test this week as the company publishes its financial results.

Tesla Stock Price Technical Analysis as a Wedge Pattern Forms

The ongoing Tesla stock price recovery is in line with our recent forecast. The chart shows that the stock has been in a strong downward trend. It moved from a high of $503 in December last year to a low of $335 earlier this month.

However, on the positive side, the stock formed a falling wedge pattern. That’s characterized by two falling and converging trendlines.

This pattern normally leads to a strong rebound, which happens when the two lines are about to converge. This explains why the stock has rebounded in the past few days.

The stock has now moved above the 38.2% Fibonacci Retracement level at $391. Also, it has moved above the 50-day and 100-day Exponential Moving Averages (EMA).

The Relative Strength Index (RSI) reversed on April 8 and has moved upwards to the current 60. Also, the stock has moved above the Major S&R pivot point, which is a bullish view.

Therefore, two potential scenarios are going forward. In the first case, the stock may continue rising, potentially to the psychological level of $500.

The alternative scenario is where the stock drops and retests the upper side of the wedge at $360. Such a move would be a break-and-retest pattern, which is a common bullish continuation sign.

Tesla to Publish Earnings This Week

The next important catalyst for the Tesla stock price is the upcoming earnings. It will come out on Wednesday this week. These results are expected to show that its business remained under pressure in the first quarter as its deliveries slowed.

The company manufactured 408,000 vehicles but delivered only 358,023. This left a gap of 50,373, its widest in years, showing demand stayed weak in the first quarter.

Yahoo Finance data shows that analysts expect its first-quarter revenue to rise 15.5%. They attribute the growth mainly to strength in its energy business. Its earnings-per-share (EPS) is expected to improve from 27 cents to 36 cents during the quarter.

More data shows that the company’s annual revenue will jump to $102 billion, while its EPS jumped to $2.03. On the positive side, Tesla may benefit from the Iran war. This has led to higher gasoline prices, with the average price rising to $4, the highest level in over three years.

Soaring gas prices may push more Americans to shift to electric vehicles in the coming months. Tesla’s sales are beginning to rise again in European markets such as France, Germany, and Norway. This marks a reversal from the declines seen in those countries over the past few years.

Upcoming Catalysts and Key Challenges for Tesla

Meanwhile, Tesla is working on a more affordable small vehicle. That, it hopes will be more affordable than its Model 3 brand. It hopes that this vehicle will help it compete with Chinese EVs.

The company is also set to benefit from the upcoming SpaceX Initial Public Offering (IPO). That’s expected to happen in June this year. Tesla is a minor owner of the company and will likely benefit if the stock jumps.

Tesla faces a major challenge because its valuation multiples remain extremely high. Its forward price-to-earnings ratio of 191 far exceeds the S&P 500’s 20.

It is also much higher than that of other fast-growing companies like NVIDIA, Palantir, Micron, and Microsoft. The other challenge is that competition in countries like China is soaring, with companies like Nio and XPeng gaining market share.