+ 1.77
+ 0.49%
+ 2.30
+ 0.66%
+ 2.91
+ 0.67%

Can Tesla's Stock Maintain The Magic $1,000 Level?

June 17, 2020 5:00 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
Can Tesla's Stock Maintain The Magic $1,000 Level?

Despite the skeptics, Tesla Inc (NASDAQ:TSLA) broke above the significant $1,000 price level for the first time in its history this month. The new high further accelerated the bullish optimism surrounding the company.

Can Tesla stick the landing?

“There continues to be a lot of enthusiasm and upward momentum for the stock that is driven by expectations for increasing EV demand,” Ivan Feinseth of Tigress Financial said when asked about Tesla’s recent price action.

Increasing electric vehicle demand is a global trend, and not just in the U.S. Many countries are committing to cut out fossil fuels. 

“There is going to be significant expansion into China. China has mandated 100% EV vehicle sales by 2030,” Feinseth said. “France also has a 100% EV mandate by 2030 as well.”

Tesla's China Play: When asked if China will favor its state-owned Nio Inc – ADR (NYSE:NIO) over Tesla, Feinseth told Benzinga it will come down to consumer choice and cost. 

"Tariffs will play a major issue, but Tesla will make their cars that are sold in China in China."

As more and more countries continue to make the switch to clean energy, the demand for EVs is and competition in the space are likely to rise. The recent IPO, Nikola (NASDAQ:NKLA), is another manufacturer of battery-electric vehicles. The company also makes hydrogen-electric vehicles.

"By the time 2030 rolls around, the landscape of EV choices will be dramatically different, but I believe that Tesla will be a dominant EV company," Feinseth said.

See Also: 5 Reasons Why Morgan Stanley And Goldman Sachs Downgraded Tesla

Baird On Tesla's Valuation: As Tesla stock continues to rise, valuations can’t seem to catch up to the price action.

On June 16, after Tesla broke above $1,000, Baird’s Ben Kallo reiterated a Neutral rating and $700 price target. 

“Investors appear increasingly willing to look through near-term noise and focus on future (2021+) revenue and earnings growth drivers. This is reasonable, in our view, given the numerous projects underway which could meaningfully contribute to growth over time,” the analyst said in a note. 

It’s important to note Tesla isn’t just a car company, it’s an energy company. Kallo said those other projects could help Tesla — and hurt it if they prove unsuccessful. 

“Tesla has numerous projects underway which could contribute to growth over time. While we continue to believe increased production capacity and new product introductions provide a steady cadence of upcoming catalysts, we do note near-term uncertainty related to COVID-19 could be a headwind.” 

The projects include:

  • The Shanghai Factory. The factory will be used to increase Tesla's Chinese production. Kallo said an additional U.S. factory could be announced in the near-term.
  • Future vehicle introductions. The Tesla Semi is being prioritized, along with the Roadster and Cybertruck, the analyst said. 
  • Tesla Energy. The company was recently approved to be an energy generator in the U.K. Tesla Energy may be underappreciated, in Baird's view. 
  • Recurring revenue. Tesla's recurring revenue should be discussed more, Kallo said. Tesla receives revenue from a data plan for its vehicles.

Tesla Moving Forward: It's unclear what path Tesla’s stock will take. Most Street valuations for the stock are well below the $1,000 price level, but nonetheless the equity continues to make higher highs.

Whether the stock moves from Musk-specific news, SpaceX launches or upcoming projects, Tesla investors have a lot to look forward to.

“I have long said the stocks are a tough stock to buy based on the valuation and the volatility. However, you gotta like and respect the man, the car and the company because Elon Musk has done an incredible job building a world's leading automobile manufacturer in such a short period of time,” Feinseth told Benzinga.

Tesla ended Wednesday's session at $991.79. The stock has a 52-week high of $1,027.48 and a 52-week low of $211.

Photo courtesy of Tesla.

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to Benzinga Podcasts and our YouTube channel.

Related Articles

Why This Nio Analyst Is Raising His Price Target For The EV Maker

Nio, Inc - ADR (NYSE: NIO) reported July quarter deliveries that came in 7,900 units, representing a 124% year-over-year increase but a 2% sequential dro read more

Tesla's Stock Pulls Back After Q2 Earnings: What Do Analysts Think?

Tesla Inc (NASDAQ: TSLA) shares traded lower on Tuesday after the company’s second-quarter earnings beat failed to wow the market. read more

Tesla, Local Rivals Nio, Xpeng, Li Growing Together, Not Cutting Each Other's Market Share, Say Analysts

Tesla Inc (NASDAQ: TSLA) and local electric vehicle rivals such as Nio Inc (NYSE: NIO) are growing the electric vehicle segment together in China and not eating into each other's market share, Zhongtai Securities read more

Warren Buffett-Backed BYD Has Much Higher Revenue Than Nio, Yet A Similar Market Cap — Analyst Says That Could Change Soon

Chinese automaker BYD Co Ltd’s (OTC: BYDDF)(OTC: BYDDY) price-to-sales ratio is expected to be on par with pure-play electric vehicle maker Nio Inc (NYSE: read more