Tesla Motors (TSLA) Breaks Out Of Cup With Handle Base On Secondary Offering

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06:37:49 pm on May 26, 2011

Usually announcements of secondary offerings can derail a stock at least in the short term, but yesterday shares of Tesla Motors (TSLA) broke out of a large cup with handle base with heavy volume after the company announced a follow on offering of 5.3 million shares to fund the development of its Model X crossover vehicle.  This announcement in and of itself would not have lead to a breakout. 

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The company also announced that in a private placement concurrent with the public offering, Elon Musk would buy 1.5 million more shares.  Talk about balls.  This guy is putting his money where his mouth is and obviously believes in this company 100%.  That’s the kind of commitment you like to see from any CEO but Musk takes it to the extreme and traders bid up the news.  Also aiding the breakout was news that Blackstar Investco which is an affiliate of Daimler AG plans  to purchase nearly 650K shares itself.

Shares of TSLA rose again a bit today, confirming the breakout of yesterday as shares remain considerably bullish.  I first transitioned from Neutral to Bullish on shares of TSLA back on March 31st following the big Morgan Stanley call and remain bullish.  I mentioned the ideal time was to catch the stock on a pull back off that gap up and the stock provided an outstanding opportunity to get in around the $25 level.  It appears there is a good chance for shares to hit the highs around the 36.42 level over the next couple months.

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