The recent pullback in Tesla Inc (NASDAQ: TSLA) stock poses a good opportunity to buy the shares, says TradingAnalysis.com founder Todd Gordon.
Todd Gordon’s remarks on CNBC’s “Trading Nation”
On CNBC’s “Trading Nation”, Gordon expressed confidence that Tesla’s long-term outlook remains strong and its undying efforts to secure an advantage in aerospace will eventually pay off. He said:
“Tesla, with its efforts in space with SpaceX, with Starlink, they just launched another mission, ultimately I think the game will be won when global internet connectivity from the sky links all the Tesla’s fleet whether it’s taxis or individual passenger cars, so I think Tesla is going to control it.”
According to Gordon, shares of Tesla might consolidate a little further over the summer but are destined ultimately for a bull run later on. The risk, he added, is significantly smaller compared to the potential reward.
Referring to technical levels, Gordon highlighted that a drop below $545 per share expires the bullish outlook – a move that he sees very unlikely. Tesla closed the regular session on Thursday at $572.84 per share.
In separates news from the United States, Apple Inc said on Friday it will still allow its employees to work remotely for two days per week.
Gordon highlights ways to benefit from the recent pullback
The TradingAnalysis.com founder recommends two ways to benefit from the recent pullback. Traders can either buy the shares right away with a stop order at $550, or they can turn to the options market with a target of $700 – a region he expects Tesla will retest as it reports its quarterly earnings in late July.
“A trade you can do is do a call spread, buying the 650 strike call in those July [16] monthly expirations, selling a 700 call, a $50 spread for which you will pay $11.20. I have $1,100 roughly of risk to make 3800. Really good reward-to-risk ratio,” he said.
The news comes a day after a report highlighted that Tesla’s net orders in China fell 50% to 9,800 in May. Shares of the company opened at $580 in the stock market on Friday and are currently exchanging hands at $595. In comparison, Tesla had started the year at a much higher $730 per share.
At the time of writing, the U.S. electric car company has a market cap of $566 billion and a price to earnings ratio of 592.13.
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Wajeeh Khan
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