Tesla just made a fourth consecutive quarterly profit, which means the stock now technically qualifies for the S&P 500 index.
Tesla made a profit of $104 million (GAP) in the second quarter, with EPS of $2.18, which blew apart even the highest estimates on Wall Street. It means the fourth consecutive quarterly profit, which fans will know means Tesla now technically qualifies for the S&P 500 index.
Don't bubble chase
We look at Tesla's revenue decline of 4% y/y as temporary. It is the pandemic temporarily distorting a picture of rising electric car production to meet very strong demand – including for the new Model Y and for vehicles in China built at the new Shanghai plant.
Still, we are not advising chasing the Tesla bubble higher at these price levels. It's no use quoting valuation metrics because those have been ignored ever since the company went public.
Tesla shares touched $1700 in a positive after hours trading response to its Q2 earnings. This time last year the shares were trading at just $260.
Chart: Tesla stock (4-months)
The share price saw an exhaustion gap a week before earnings were released, possibly an indication the trend is due a correction. Potential support in any correction lies at previous gaps between $1150 and $1350.