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Tesla stock seems to be unstoppable as it soared past $400 on Thursday, which is the culmination of a late-year rally that started in October when the Silicon Valley car maker surprised investors by showing a profit for its third quarter.
Tesla stock seems to be unstoppable in the last few days. At the time of writing, the stock just hit a record high, rising 2.39% to $402.67. This puts the company close to that $420 figure that costs its CEO Elon Musk $20 million in fines with the Securities and Exchange Commission (SEC). When the stock reaches $420, Musk said Tesla will go private.
Since Tesla announced a surprise profit in the third quarter, the stock has been on a rise. It finally recovered from its problems caused mostly by Musk’s Twitter blabbing. Just for reminder, before the year started, Tesla’s free cash flow increased from negative-$4.1 billion in 2017 to negative-$222 million in 2018. That was the time when the company finally started seeing financial benefits from cost-cutting initiatives and higher-volume Model 3 production.
Now, car deliveries are jumping, with trailing-12-month vehicle deliveries up 88% year over year, driven by Model 3.
Trailing-12-month deliveries of the important vehicle, the cheapest Tesla’s car yet, have more than tripled year over year.
The company’s core business currently has a pretty strong outlook. This is partly because of poor results by its competitors and the successful beginning of manufacturing and sales in China.
We have already reported that the company is considering cutting the prices of its China-built Model 3 sedans by 20% or more next year. Prices of the cars, which will be manufactured in Tesla’s new Shanghai factory, will stand at $50,500.
Chinese Tesla to Get Government Subsidies
Meanwhile, some media reported that the carmaker is considering lowering the price of the China-built Model 3 sedans by 20% or more in 2020. That’s not all, however. Two weeks ago, the Chinese Industry Ministry included Shanghai-built Tesla Model 3 on the list of vehicles recommended for government subsidies.
And let’s not forget the fact that at the moment when the news about its rival Mercedes-Benz postponing the presentation of its latest electric SUV in the United States and Canada came out, the company’s stock rocketed to the record as well.
Also, just three weeks ago, Tesla unleashed its futuristic Cybertruck with a price ranging between $39,900 and $69,900. Last month, Musk revealed that he intends to build its first European Gigafactory in Germany. The company is reportedly in talks with German steel manufacturer and industrial engineer giant ThyssenKrupp about participating in the construction of the American electric carmaker’s first European Gigafactory.
On the other hand, it’s not just Model 3 but also its Model X that is successful. The latter recently received the top safety rating from the European New Car Assessment Programme (Euro NCAP), becoming the first and only SUV model to get Euro NCAP’s highest rating.
It seems that Tesla doesn’t really react on a “bad” reports even if it comes from eminent companies. On Monday, Credit Suisse analyst Dan Levy said Tesla holds a lead in electric vehicles, particularly in the development and production of batteries. However, he maintained his “Underperform” rating and $200 price target on TSLA stock.
“While we hold an Underperform rating on Tesla, we nevertheless believe it’s important to give Tesla its credit where due. We believe Tesla is leading in the areas that will likely define the future of carmaking – software, and electrification”, said he.