Tesla's Stock Heads To A Crossroad

(Note: The author of this fundamental analysis is a financial writer and portfolio manager. He and his clients own shares of TSLA.)

Tesla Inc. (TSLA) will get the opportunity to regain some investor confidence when the company reveals its new semi-truck on the evening of November 16. The launch could help the company's stock rise back to $335 a share.

According to industry data tracked by Bloomberg, the heavy-duty freight truck business in North America accounts for $30 billion in sales a year. A strong showing could take Tesla's stock out of the doldrums and put it back in investors' favor.

Tesla shares have had a brutal two months. The stock price has fallen by nearly 19 percent amid ongoing production issues for the Model 3, Tesla's new electric four-door sedan designed for the masses.

The company lost even more credibility with investors after reporting a wide-than-expected 3Q loss. It also delayed the production of 5,000 Model 3 cars per week by three months, to March 2018.

Back to $335

Tesla's chart has a few favorable factors going its way. First, TSLA has a strong level of support around $300 and is now rising back into the gap created when the stock fell following 3Q results on November 2.

The strength exhibited should pave the way for shares to continue to increase, potentially back to levels approaching $335. That's an increase of 7 percent from Tesla's current stock price of around $312.

Improving Technicals

When looking more closely at Tesla's trading pattern, we see the stock has been able to stabilize around $303.50 for nearly two weeks.

Since November 2, Tesla shares have rebounded slightly, increasing by almost 4.5 percent, despite a weak broader market that has seen the S&P 500 Index decline by a little less than 1 percent.

TSLA data by YCharts

Big Drop

Tesla shares dropped lower after the company released its third-quarter financial results at the start of November. The stock plunged 9 percent, to a low of around $292.

Since then, Tesla has been able to recoup some of those losses and began exhibiting some signs the stock could rebound. (See also: Tesla Shares Set to Rebound Short Term After Miserable Stretc h.)

The semi-truck launch on Thursday evening could give Tesla the perfect opportunity to shift attention away from its ongoing Model 3 production issues to new opportunities ahead. It could provide the emotional lift needed to take Tesla stock out of the basement.

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.

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