Tesla Stock Breaks $400 Before Pullback Amid Price-Target Hike, Cheaper ‘Model Q’ Launch Report: Retail Stays Guarded

Shares of Tesla Inc surpassed the $400 mark on Monday morning for the first time in three years, on a split-adjusted basis, but profit-booking and a potential resistance at the key level dragged the stock below Friday’s closing price.

The surge followed a price-target hike by Deutsche Bank, which raised its target from $295 to $370 while maintaining a ‘Buy’ rating. 

The revised target, though below Tesla’s current price, comes as the brokerage believes investors will seek "safe havens" in autos where margin expansion and outgrowth are "relatively shielded from price/mix and environment-driven headwinds." 

Deutsche Bank sees Tesla as a “key idea” for next year.

Adding to the bullish momentum were reports of Tesla’s plans to launch a sub-$30,000 vehicle, tentatively named “Model Q,” in the first half of 2025. 

Global China EV, citing comments from Tesla Investor Relations head Travis Axelrod at a Deutsche Bank conference, described the vehicle as 15% smaller than the Model 3 and built on a new platform with manufacturing costs nearly halved. 

After subsidies, the “Model Q” could start at $25,000. Tesla reportedly expects the model to drive 20%-30% year-over-year (YoY) growth in 2025, with an estimated 500 km range and single- and dual-motor variants.

TSLA sentiment and message volume on Dec 9 as of 10:15 am ET | source: Stocktwits

Despite the upbeat news, retail sentiment on Stocktwits remained ‘neutral’ on Monday morning, with mixed opinions among retail investors. 

While some bearish traders pointed to technical analysis and declining delivery estimates to predict a pullback, bullish participants anticipated new record highs, driven by Tesla’s strategic positioning and the upcoming low-cost model.

Fundamentals haven’t been a major driver of Tesla’s recent gains, with the company facing challenges in China, Europe, and the U.S. 

Price competition and slowing EV sales have reduced Tesla’s earnings expectations for 2024. 

Goldman Sachs recently lowered fourth-quarter delivery forecasts to 510,000 units, slightly below the consensus estimate of 515,000.

Looking ahead, the self-driving robotaxi business is the next key catalyst. Tesla plans to launch the service by late 2025, aiming to compete with Alphabet’s Waymo.

Despite struggling for the first half of the year, Tesla’s stock has climbed more than 60% year-to-date, buoyed by investor optimism about its long-term potential, as well as CEO Elon Musk’s closeness to President-elect Donald Trump.

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