Tesla’s Stock Price Soars Past 1000 USD, How And Where Is It Going?
The massive Tesla’s stock rally has baffled even the seasoned financial analysts and top brokers. Just this week, this California-based carmaker saw its car sales go beyond expectations in the second quarter.
In this second quarter, Tesla managed to deliver about 90,650 units, far too much more than the 72,000 that analysts had predicted. And the actual number of vehicles the company delivered was comfortably more than 86,000, the highest estimate predicted by FactSet.
In effect, Tesla’s stock rose by about 9% and traded at $1,228, a very high figure that’s putting the company on the track of registering a new record.
In the period, Tesla delivered 80,050 vehicles comprising Model Y and Model 3 vehicles, and 10,600 Model X and Model S vehicles combined. Those are impressive figures, given that in the June quarter, the company reported that it produced 82,000 units. This happened although the company’s factory at Fremont was shut down because of the coronavirus pandemic.
The factory is now operating, though it is still producing at a fraction of its normal capacity.
Daniel Ives, a Wedbush analyst, said that in his opinion, the numbers delivered by Tesla are a “jaw-dropper,” given this happened during the coronavirus lockdown. The same sentiments were echoed by an official from one of the top stock brokerage firms in California who described the figures as a “major home run.”
After Tesla reported on its delivery numbers, Ives carried out research whose result showed that China stole the show in this second quarter in terms of sales, though Tesla never provided regional breakdowns as far as its production and sales were concerned.
Before Tesla delivered its report, Ives put a price target on Tesla’s stock at $1,250 up from $1,000. After the report, he adjusted his share price target to $2,000. It appears things are looking cozy for Tesla, and it is likely to plow back the losses it made during its partial lockdown.
Another analyst, Nelson Garret of the CFRA, adjusted Tesla’s share price target from $400 to $1,100. Though not as optimistic as Ives’ prediction, but still it shows that Tesla’s shares will continue trading above the $1,000 mark.
At such a high price level, some of the best online investment companies are slowing down the purchase of Tesla’s shares, especially for short-term investors. This is because, if the shares prices peak and start coming down, the traders will lose their investments. Garret himself said that they are reluctant to recommend Tesla’s shares to any investors right now.
RBC’s analyst Spak Joseph also stuck a cautious note, citing Tesla’s older car models still in the market. Spak explains that the boost in Tesla’s sales resulted from its entry into the China market and not from the older models.
“Yes, the company showed good numbers in the motor industry that suffered a great deal from COVID-19 pandemic, but it only benefited because it entered the China market where it had sold cars in the previous years and only established a company this year,” said Spak.
Assuming that Tesla sold 30,000 China’s Model S, it means the remaining units were sold in mature markets such as Europe and North America, where available data show that sales went down by about 36%. What this means is that once China’s market matures, the sales will begin slowing down, and as a result, Tesla’s share prices will also come down.
The top online stock brokers in the U.S. agree that Tesla’s shares will continue trading above $1,000 but only for a few months, and eventually it will come down unless the company can continue to capture about 70 – 80% of the share of the U.S. market.