Tesla Stock Is Having a Great Week. Where Shares Can Go.

Coming into Thursday, Tesla stock was down about 21% year to date, but up about 67% over the past 12 months. (Dreamstime)

Tesla stock managed another gain on Thursday while the market slipped. Shares are having a solid week and are looking better to traders. There are a few reasons for that. The biggest one is likely CEO Elon Musk.

Shares of the electric-vehicle maker traded as low as $316.16 but rose late, closing at $322.27, up 0.7%, following Wednesday’s big 3.8% gain. The S&P 500 and Dow Jones Industrial Average fell 0.1% and 0.5%, respectively.

Coming into Thursday trading, Tesla stock was up 5.7% for the week, adding about $17 per share. One reason for the strength is simply recent weakness. Shares dropped 4% last week, dipping late in the week after a Florida jury, on Friday, awarded $329 million in damages for a fatal 2019 crash involving Tesla’s driver assistance features. Tesla, according to the jury, bore one-third of the responsibility for the accident.

The potential for legal issues to derail Tesla’s, and the car industry’s, autonomous driving technologies is real, but investors seem to have moved past the initial shock of the decision.

A new pay package for Musk might have helped. Tesla, on Monday, disclosed an award of almost 100 million shares of restricted stock for Musk, who has complained that his low holdings of Tesla stock put him at risk of being ousted by activists. He wants 25% voting control of Tesla shares.

The new award, when fully vested, will give him about 506 million shares of Tesla. He also has about 304 million stock options. That’s 810 million shares of about 3.5 billion shares outstanding, after Musk converts his options into stock. That’s about 23% of the shares outstanding, but Musk recently pointed out that he’d need to sell some of the options to pay the taxes. After that, he’d be left with roughly 675 million shares, or just under 20% of the new total.

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That isn’t 25%, but investors don’t seem to mind paying Musk his money. Wedbush analyst Dan Ives said Monday that the 96 million-share award removed an overhang on Tesla stock. He seems to be right. Shares are up since the award.

The gains have made Tesla stock look stronger technically, wrote Fundstrat head of Technical Strategy Mark Newton on Thursday. Improving “relative strength” could be a sign to traders to add to positions now. Relative strength is a momentum indicator used by traders that essentially means investor sentiment has started to improve.

Fairlead Strategies founder and market technician Katie Stockton says that Tesla’s stock has been stuck close to its 200-day moving average for a while. That could cap any rally at around $330 a share, unless something changes to excite investors.

Expanding Tesla’s robo-taxi service to more cities could be a catalyst for shares. Tesla launched a self-driving cab service in Austin, Texas, on June 22. Shares were about $322 before the launch. That’s right about where they start Thursday’s trading.

Coming into Thursday, Tesla stock was down about 21% year to date, but up about 67% over the past 12 months.

Write to Al Root at allen.root@dowjones.com