Look what happens when Tesla (TSLA) finally starts keeping its promises, its stock goes on a relentless rally with seemingly no end. Since the beginning of June, TSLA has surged 260%, which is nothing less than incredible for a public company of this size. TSLA met its seemingly unreachable vehicle delivery goals (up 50% from 2018) and was ahead of schedule with its Shanghai factory. The company just beat big on top and bottom-line metrics for Q4 earnings, sending TSLA to levels few could have predicted.
This euphoria can’t last forever but that doesn’t mean it’s over. Investor, analysts, and traders alike have been trying to find a way to value this enigma of a stock that not only has no close comparables but is wildly unpredictable.
Tesla hit a record number of deliveries as well as positive operating and free cash flows for the past 3 quarters in a row. This electric vehicle giant has also begun to turn a quarterly profit with the anticipation of having its first annual profit in 2020. The anticipated Model Y commercial production is several quarters ahead of schedule and is being released less than a year after its prototype. This quick turnaround proves the company’s ability to leverage its platform effectively to stay ahead of quickly evolving trends.
Now that Tesla has begun to keep its promises, it will be an expectation from shareholders moving forward. Any wildly outlandish claims made by its eccentric CEO Elon Musk are going to be taken seriously. He tweeted back in August of 2018 that he would take the company private at $420 (a modest 23% premium at the time), but no one took him seriously. Today TSLA is trading at more than 50% premium to that $420 level.
Will Elon and his EV giant be able to maintain its current growth trajectory? I think the answer is yes and more. Tesla’s Shanghai Gigafactory gives the company direct access to the largest EV market in the world. Now Tesla is planning its construction of a European factory outside of Berlin, which will further establish this enterprise’s world domination of the automotive market.
The only concern that I have with this stock is its excessive amount of volatility. Like I said, the stock has run up 260% in 8 months, and this means that a pullback is not out of the question. None the less analysts, are raising their price targets on TSLA with one analyst betting this stock will make it to $6,000 in the next 5 years.
Tesla was one of the most bet against stocks in the market, but I think it’s time for the short sellers to throw in the towel. Tesla is finally keeping its promises, and the markets are loving it.
Deep down, everyone wants this electric vehicle giant to succeed because it represents a greener, more efficient world.
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