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Tesla Stock Gets a $100 Christmas Gift from Wedbush


Dec. 27 2019, Updated 7:35 a.m. ET

Tesla stock (TSLA) is strong and trading at an all-time high. It seems like everything Elon Musk touches is turning into gold these days. Heck, even the ugly Cybertruck made millions in pre-orders. Tesla stock has risen 29.5% this year.

Today, Tesla stock got another boost from Wedbush analyst Dan Ives. While Ives maintained his “neutral” rating for Tesla, he raised its target price by $100, the amount needed to pre-order the Tesla Cybertruck. His target price now stands at $370, still short of the stock’s current price by about 14%. Tesla stock closed 3.4% higher yesterday.

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Tesla is reaching new highs in the US

The first argument put forth by Ives for the target price revision was US demand for the Model 3. Tesla’s Model 3 has quickly become the company’s bestselling model. In November, Tesla sold 10,500 Model 3s, taking its 2019 tally to 133,500 units. Tesla’s Model X and Model S also feature in the top five EVs (electric vehicles) sold in the US. The Model 3’s success helped grow Tesla’s deliveries by 47% in this year’s first 11 months. Meanwhile, the demand for cars running on fossil fuels dwindled, with US car sales falling by 9.8%.

The Model 3’s success has helped Tesla win close to 80% of the US EV market. Legacy automakers are still catching up. Ford (F) only recently launched its first all-electric vehicle, the Mustang-based Mach-E SUV. And while General Motors’ (GM) Chevy Bolt and Volt are on the road, they’re no match for Tesla. Fiat Chrysler (FCAU), which recently announced a merger with France’s Groupe PSA, has even talked about buying technology from Tesla to spearhead its EV foray.

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Tesla is also spreading its wings in Europe

Ives also highlighted Tesla’s European strength in his note. Electrek reports Tesla Motors Club estimates Tesla’s European deliveries could touch six figures this year. In this year’s first 11 months, Tesla’s European deliveries came in at around 87,500. This year, the Netherlands surpassed Norway to become Tesla’s biggest European market. Tesla’s presence in Germany is also picking up.

The company recently drafted a contract to buy land near Berlin to open a Gigafactory. Local production, coupled with favorable policies from the German government, could help Tesla continue its blitzkrieg in the European market.

Tesla stock is also gaining traction in China

It’s not just the calmer trade waters driving Tesla in China, it’s also the company’s Gigafactory near Shanghai. Ives noted that Tesla’s Chinese factory is picking up, beating expectations. And he’s not the only one with that view. A few days ago, Oppenheimer analyst Colin Rusch expressed optimism about Gigafactory 3. In a note, he said that “expectations for a relatively smooth (production) ramp of Tesla’s China facility are increasing.” Rusch believes that Tesla’s experience with ramping up production of the Model S, Model X, and Model 3 could help its Gigafactory 3 ramp-up.

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Analysts are turning positive on Tesla stock

In the last couple of weeks, analyst comments have boosted Tesla stock. Last week, Credit Suisse analyst Dan Levy, a longtime Tesla bear, said, “We believe Tesla is leading in the areas that will likely define the future of carmaking – software and electrification.”

CNBC’s Jim Cramer has also sided with Tesla after taking the Model X for a test drive. He said, “I give up. The car is too damn great,” And during his CNBC show, Mad Money, Cramer said, “I don’t want you to own Ford, I want you to own the stock of Tesla.” He added, “I’m not saying one’s safer than the other, I’m saying they both have just O.K. balance sheets, but one’s got more upside.”

Analysts’ recommendations for Tesla stock

Of 33 Reuters-surveyed analysts covering TSLA, 33% suggest “buy,” 39% suggest “sell,” and 28% suggest “hold.” In spite of Ives’s price target update, Tesla stock is trading well above analysts’ average target price of just under $300. Can Tesla stock continue its rally into the new year? Like Ives, we’re cautious about TSLA’s outlook.


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