Tesla Motors Inc. Stock Peeled Out Again Today, but Will It Hit New All-Time Highs?

Tesla shares just keep soaring. How high will they go?

Jan 21, 2014 at 3:15PM

Tesla Plate Levi

Source: Photo taken by Levi Sim, used with permission.

Tesla (NASDAQ:TSLA) traded higher Tuesday morning, up 3.6% at the time of this writing. The stock's gain follows a two-month rebound from lows under $140. But with the stock approaching its all-time high of $194.50, it begs the question: Will Tesla stock soon break into new territory?

TSLA Chart

TSLA data by YCharts

Speculating where any stock is headed in the short term is a tough game -- especially hot stocks like Tesla Motors that trade at wild premiums, inviting volatility. But investors with Foolishly long-term horizons can at least examine the potential drivers behind big price swings to see what the recent run-up says about the stock and where it could potentially go next.

Drivers
Over recent weeks a number or drivers could be attributed to the stock's run-up, but here are what are likely to be the two most important.

A lack of fires. After several high-speed accidents that resulted in Model S battery fires, the National Highway Traffic Safety Administration opened an investigation  to "examine the potential risks associated with undercarriage strikes on model year 213 tesla Model S vehicles." The Model S fires were largely seen as one of the driving forces behind the decline of Tesla's share price from levels around $190. Notably, however, any negative news has the potential to spark a sell-off when a stock is trading at such an aggressive valuation.

But since the first three battery fires, none have been reported. With every day without a fire, the statistical probability of a Tesla battery fire based on passed instances declines -- and it's been over two months now. Another fire would almost certainly put pressure on the shares, so a lack or fires is relieving negative pressure on the stock's extremely forward-looking valuation. Perhaps Tesla's over-the-air update to the Model S suspension at highway speeds was the only fix required to mitigate the problem.

Better than expected Q4 revenue. At the Detroit Auto Show last week Tesla announced that it expects to beat its own revenue guidance by 20% and exceed its estimated vehicle deliveries by about 1,000 vehicles. Based on Tesla's historical quarterly performance, that's a substantial beat.

Quarter

Guidance

Actual

Surprise Factor

Q1 2013

4,500 vehicles

4,900 vehicles

8.80%

Q2 2013

5,000 vehicles

5,150 vehicles

3.0%

Q3 2013

Slightly over 5,000

5,500

About 6.0%

Q4 2013

Slightly under 6,000

6,900

About 17.0%

Q3 and Q4 Model S deliveries in 2012 are not included in chart above (in both quarters, Tesla missed guidance). Source: SEC filings and press releases

Other announcements at the show included expectations for "relentless" growth in 2014 and a plan for a supercharging network in China.

Headed back to $190?
Both drivers are certainly good reasons for investors to have incrementally greater confidence in Tesla stock. But considering just how forward-looking investors' expectations are for the stock, the main story for Tesla is still really a story of supply. The key question still remains tough to answer: Will Tesla be able to ramp up production to produce hundreds of thousands of affordable cars per year by the time it launches its planned so-called Model E in 2016 or 2017?

The second driver (that Tesla is exceeding its own production expectations) is definitely a positive sign that Tesla is ready to execute at levels beyond investor expectations. But the company's performance for the entire year of 2014 will be the first ultimate gauge of just how rapidly Tesla can expand production.

So will Tesla hit highs above $190 again? Trading at more than 10 times sales it's going to take some very bullish guidance from the company when it gives its full-year outlook.

Looking for the next Tesla? Here's a great place to start:
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Fool contributor Daniel Sparks owns shares of Tesla Motors. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers