With shares of Tesla (NASDAQ:TSLA) trading around $39, is TSLA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for a Stock’s Movement

Tesla Motors designs, develops, manufactures, and sells electric vehicles and electric vehicle powertrain components. With the rise of the green vehicle movement, Tesla participates in an area that is poised to see increasing demand. Not to mention, the vehicles that the company is outputting are aesthetically pleasing. Look for the company to continue to take market share in a new automobile industry.

T = Technicals on the Stock Chart are Strong

Tesla has made significant gains since its initial public offering in 2010. The stock is trading just about at all-time highs, but must break above the critical $40 per share zone. Tesla is seeing higher highs and higher lows, as a great uptrending stock should. The stock is currently building up steam as it is consolidating in the top end of a recent range. If momentum begins to pick-up, it is poised to move past the previous highs of $40 per share.

With the use of key simple moving averages, a trend and its strength may be easily evaluated. What are the key simple moving averages? The 50-day, 100-day, and 200-day simple moving averages. What are they saying about Tesla’s price trend and its strength? Currently, Tesla stock is trading above all of its rising key simple moving averages which signals a strong uptrend in the stock.

An easy way to gain perspective into investor sentiment is through the use of the options market. More specifically, taking a look at the implied volatility and implied volatility skew levels of Tesla options may help determine if investors are bullish, neutral, or bearish. The implied volatility of Tesla options is at 27.06 percent today, which coincides with a 6th percentile over the last 30 trading days and 20th percentile over the last 90 trading days. What does this mean? This means that investors or traders are buying a very small amount of call and put options contracts as compared to the last 30 and 90 trading days.

The implied volatility skew of April and May put and call options is at about average. So as of today, there is an average demand from call and put buyers or average supply of call and put sellers, all neutral over the next two months. Investors are buying a minimal amount of call and put option contracts and are leaning neutral over the next two months.

E = Earnings Are Increasing Quarter-Over-Quarter

A growth company like Tesla will sometimes see negative earnings and revenue growth rates. This is because the company is still researching and developing. So, the stock price will take these figures into consideration but put more emphasis on the trend of these numbers. The last four quarterly earnings growth and revenue growth rates have been negative for Tesla. However, the more important factor is what investors thought about the earnings.

How did investors like these numbers? The last four quarterly earnings announcement reactions help gauge investor sentiment on Tesla’s stock. The last four quarters have seen next trading session returns of -8.77, 8.92, -2.83, and 9.64 percent. Investors have been mixed on Tesla’s earnings announcements but history shows that these negative announcements have been buying opportunities.

E = Excellent Relative Performance Versus Peers and Sector

Tesla has been a market leader but how has the stock done relative to its peers and sector? Year-to-date, the stock is returning 3.03 percent while its competitors, Toyota (NYSE:TM), General Motors (NYSE:GM), Ford (NYSE:F), and the sector are returning 8.51, -2.78, 0.98, and 5.93 percent respectively. Tesla has outpaced its competitors and sector year-to-date.


Tesla participates in a new area that is seeing explosive growth. The stock is close to new all-time highs and has outperformed its competitors by a wide margin. Earnings and revenue growth rates have been received with mixed feelings by investors since the company is still working out its research and development. WAIT AND SEE what Tesla does at these price levels before getting in.

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