$100 Oil might be good for Tesla stock

Tesla shares pushed above $1,000 this week but then fell back. The long-awaited inauguration of the factory in Berlin and renewed demand for EVs as oil prices soar is encouraging bulls.

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The fact that Tesla continues to rise despite no major news that would change the company's fundamentals might leave some analysts scratching their heads. Tesla's valuations are still through the roof, and the Fed is squeezing risk capital.

But with fuel prices reaching record highs in America, it's unlikely demand for EVs will slack off soon. This could make Tesla one of the few "inflation-proof" companies as it can keep its margins intact despite material price increases.

China headaches for autos


The spread of covid in China has proven to be another headache on top of a crisis for automakers. Many firms have had to suspend production for days at a time, and Tesla hasn't been the exception. More critically for the EV producers are supply chain problems and getting parts to the factories.

Tesla's primary challenge has been and continues to be meeting demand. Unlike other automakers who have to worry about marketing, Tesla's main problem is delays in fulfilling orders. The waiting list for the Model X, for example, was last reported at 11 months, following another delivery delay.

Inflation pricing power


Rival NIO was the latest in Tesla competitors to vow not to raise prices. But Tesla has the demand figures, even with the inauguration of its latest factory, to raise prices and still not lack customers. Two weeks ago, the firm raised prices on the Model Y in the US and Model 3 in China.

While other automakers warn of increasing costs and supply chain issues, Tesla is simply raising prices. But how long can that strategy last? Well, global consumer confidence might be starting to slip, and then it will be time to re-evaluate if Tesla's apparent strategy can be sustained.

TSLA back to four digits


TESLA’s share price has soared nearly 40% over the past 10 days, breaking past both the 200 and 50-day averages. Since March 14, the stock has printed a green bar every single day - a 7-day streak.

Depending on where Thursday’s session concludes, TSLA could go either way. If the stock ends trading below $1000, $900 becomes immediate support. But if bulls recapture the psychological level, prices could spike to $1100.

The 50-week moving average has acted as dynamic support on the past two occasions it was tested, followed by a breakout to new all-time highs. The third time could also be the charm but if it isn’t, it could lead to a more significant downturn.

Tesla Motors (2yrs) log chart

Source: Spreadex trading platform

Key takeaways

News around TESLA's new factory in Germany could be offset by further delivery delays amidst the covid spike in China. With inflation adding to fuel prices, however, longer-term projections for the EV manufacturer are more optimistic despite the Fed’s squeezing of risk capital.

Investors must be cautious around the $1000 level as the stock has already spiked nearly 40% since March's low, and TESLA’s price increases might not be accepted for much longer.