Tesla shares recover as Trump and Musk feud eases

Tesla shares experienced a sharp decline last week, losing all of their May gains. The 20% drop in such a short period of time seemed excessive to many traders, and on Friday they began to buy back the drawdown. Yesterday, the upward movement accelerated, with prices returning above the $300 level. Now the bulls can target the 330 mark, where there is an unfilled gap and a high probability of profit-taking on long positions.

In recent days, tensions in the feud between Elon Musk and Donald Trump have eased. The Tesla CEO left the White House, displeased with the cancellation of incentives for electric vehicle purchases in the new budget bill. Traders' initial reaction was sharply negative, but a more moderate sentiment gradually prevailed. Contrary to his threats, the US president did not terminate Musk's government contracts, and the Tesla CEO can now focus entirely on his business.

Morgan Stanley analysts yesterday confirmed their positive outlook on Tesla shares with a target price of $410. In their opinion, the cancellation of tax incentives for electric vehicles will have a moderately negative effect on the company. At the same time, Tesla has many divisions whose future contribution to financial results is underestimated. In particular, this applies to developments in artificial intelligence, autonomous driving, robotics, and renewable energy.

One of Tesla's most promising business segments is set to show results this week. On June 12, public testing of autonomous taxis will begin in Austin, Texas. At first, 10–20 electric cars will be involved in this initiative, which will be monitored remotely by operators. If all goes well, Tesla plans to significantly expand the scale of testing. Dan Ives from Wedbush thinks that Tesla's autonomous taxis will appear on the roads of 20–25 cities as early as next year.

The main attraction for Tesla stock buyers right now is last week's unfilled gap at 330. Once it's reached, prices might start to pull back for a correction.

Consider the following trading strategy:

Buy TSLA at the current price. Take profit — 330. Stop loss — 285.