Tesla share price on watch, nearing key support level

Tesla’s valuation

Tesla’s forward EV/sales currently stands at 10.5, commanding a significant premium over the automobiles industry average of 4.9 and the consumer cyclical sector average of 2.7. This suggests that investors have set high expectations for Tesla’s future growth, considering that its five-year historical revenue growth of 50.8% towers above the automobiles industry of 13.4%.

Currently, analysts’ views towards Tesla remain divided. The stock has 19 ‘buy’ recommendations, 13 ‘holds’ and 12 ‘sells’. The Bloomberg 12-month consensus target price of US$625.18 suggests a potential 4.4% upside from the closing price of US$599.05 at the time of writing.

Technical analysis

Tesla’s share price seems to fall within a descending triangle pattern, with a crucial base support level at US$545 in the near term. Prices have tested and rebounded off the US$545 level on previous three occasions and a price close below this level may potentially draw further downside to the next support level at US$460.

That said, last Friday’s price action sees the 200-day MA holding up for now, with a higher lows on the MACD indicating some upside momentum. Should price move higher, one may find resistance at the US$650-660 region from both its 50 and 100-day MA, along with the upper trendline of the descending triangle.

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