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Bullish run set to continue for Tesla share price

Bullish run set to continue for Tesla share price

The Tesla share price rose in posted market trading last night in the wake of the third-quarter numbers being released. 

EPS was 76 cents, and that comfortably topped the 57 cents consensus estimate. Revenue came in at $8.77bn which was ahead of the $8.36bn forecast. The company posted its fifth consecutive quarterly profit. Keeping in mind that a company needs to post at least four consecutive quarterly profits in order to be included in the S&P 500 index, the latest set of results bodes well for the group.

Tesla share price charged by strong results

In the three-month period, Tesla Motors Inc derived $7.6bn from automotive revenue, which accounted for over 90% of total revenue. Gross margins in the automotive sector were 23.7%, and that was an improvement on the 18.7% posted in the second quarter. It would appear the company is fine tuning its manufacturing process and keeping costs under control. Societies are pushing for greener policies, and it is being supported by governments. In the three-month period, Tesla collected $397m from regulatory credit, and that was a 7% fall from the previous quarter.

Operating costs jumped by 33% to $1.25bn, and that was largely down to a high level of capital expenditure as the company build factories in the US and Germany. As economies are reopening, demand for vehicles is slowly picking up, broadly speaking. Tesla is aiming for 30-40% growth in terms of annual vehicle production.     

Tesla share price still a standout performer

The Tesla share price hit a record high in early September, just after it completed its 5-for-1 stock split. The move happened around the time as Apple completed its own stock split, and it was believed the restructuring of the share capital was motivated by a desire to reduce the Tesla share price in a bid to make it easier for retail investors to purchases the stock.

Tesla has been one of the standout performers in terms of share price action. In early January, it hit a record high – over $193. When the pandemic set in, the stock price was dragged lower. It bottomed out in mid-March and it set a new record high by the middle of June. Multiple record-highs were achieved between June and September.

The Tesla share price endured a correction at the start of September – along with the wider market. Since the middle of last month, the stock has been pushing higher, and while it holds above the 50-day moving average at $414, the broader bullish trend should continue. A break above $502 should pave the way for further gains. A move lower might find support in the $351 area.

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