Shares of Tesla have been on a meteoric rise over the past three weeks. Right before Thanksgiving, shares of Tesla were trading at around $328 per share. At the time of this writing, Tesla shares are trading at $419, representing a whopping 27% increase in a very short period of time. Earlier today, Tesla shares for a brief time even eclipsed the $420 threshold which, while not bearing any true significance, was the price at which Elon Musk famously said Tesla was going to go private.
With Tesla shares appreciating steadily over the past few days, some were anticipating the stock would drop drastically this week. And yet, the share price keeps on rising. Naturally, this begs the question: why are investors so bullish on Tesla all of a sudden?
While the fundamentals surrounding Tesla haven’t changed much, there are a few potential factors which may help explain why the stock is on a roll. Perhaps most importantly, there is renewed optimism around Tesla’s efforts in China. This is centered around reports that Tesla was granted a $1.4 billion loan from Chinese banks for its Shanghai factory, a development that underscores strong demand for Tesla vehicles abroad. Incidentally, Tesla is hoping to see Model 3 production in China hit 1,000 units/week by the end of the year.
There is also a lot of optimism surrounding the recently unveiled Cybertruck. Though the vehicle’s aesthetic is still somewhat polarizing, Musk a few weeks back noted that reservations (which are refundable) hit the 250,000 threshold. Coupled with word that Model Y production is coming along faster than anticipated, some analysts believe that Tesla is currently firing on all cylinders and that the company has learned from a number of its past mistakes.
With Tesla hitting the $420/share mark for a brief period today, Musk, as he’s prone to do, posted the following on Twitter:
Whoa … the stock is so high lol
— Elon Musk (@elonmusk) December 23, 2019
Looking ahead, it will be telling to see how many vehicles Tesla manages to deliver this year. Recall, the company was aiming to see deliveries fall somewhere in the 360,000 to 400,000 range. At the end of the third quarter of this year, Tesla had delivered 255,200 vehicles. Suffice it to say, Tesla will be cutting it incredibly close this year, but it is doable.
All that said, Tesla shares are notoriously volatile and, as we’ve seen happen many times before, it may drop precipitously just as quickly as it rose.