Tesla share price has made a strong recovery in the past few weeks as the recent sell-off ends. The TSLA stock jumped to a high of $932, which was the highest point since May 4th of this year. It has risen by over 45% from the lowest level this year. As a result, Elon Musk has seen his net worth rebound to over $262 billion.
Why TSLA has recovered
Tesla stock price has recovered because of several key factors. First, the cost of doing business has dropped sharply in the past few weeks. For example, the prices of key raw materials used by Tesla like nickel and lithium have continued falling recently. At the same time, the cost of ocean shipping has dropped remarkably as demand eases.
Second, Tesla published a strong quarterly results in July. Its revenue came in at $16.93 billion, which was higher than the expected $16.92 billion. Similarly, its profit per share of #2.27 was better than what analysts were expecting.
Third, Joe Manchin agreed to major infrastructure spending in the United States. As part of the bill, the American government will provide users with more incentives to buy electric cars. The incentive will come in as long as most parts are made in the United States or other friendlier countries.
As such, there is a likelihood that Tesla will have more sales in the next few years. Finally, Tesla share price has jumped because of the broader recovery of the stock market. Most equities have rallied, as evidenced by the strong performance of the Nasdaq 100 and S&P 500 indices.
Tesla share price forecast
My past TSLA stock prediction did not work out well. At the time, I warned that the shares would likely drop to about $500. Instead, the stock appeared to find a strong support at $621, where it bottomed. On the four-hour chart, we see that the shares have moved above the 25-day and 50-day moving averages.
They have also rallied above the important resistance point at $793, which was the highest point on June 3rd. Therefore, the stock will likely keep rising as bulls target the next key resistance point at $1,000. A drop below the support at $800 will invalidate the bullish view.