1 Key Reason Why Tesla Motors Traded Near an All-Time High Today

Tesla Motors stock is soaring this week, but not for the reason you might think.

Feb 11, 2014 at 4:40PM

Shares of Tesla Motors (NASDAQ:TSLA) opened the week on a high note, as the stock zoomed to $196 in early trading on Monday. Today, the stock moved above $199 per share in the final hour of trading, edging closer to its 52-week high of $202.20, before dropping back to $196. Shares of the electric-vehicle maker even crossed the $200 mark in early trading on Tuesday.

Let's look at what's pushing Tesla higher this week, and whether investors should be worried about a pullback.

Setting new records
Tesla has come a long way since 2011 when it was the most shorted stock on the Nasdaq. Last year, shares of Tesla quadrupled in value. The company carried that momentum into the new year, with the stock gaining more than 30% so far in 2014. Tesla has China to thank for this week's move, after the Asian country's finance ministry declared higher than anticipated subsidies for electric cars purchased in the nation.

Over the weekend, China said it would trim EV subsidies by just 5% this year and 10% in 2015, according to CNN. That is much less of a reduction than previously expected. Moreover, China offered electric-car buyers a subsidy of between 35,000 yuan and 60,000 yuan per vehicle last year, which translates into roughly $5,780-$9,900, CNN reported.

This news is particularly important because China is a key growth market for Tesla. The EV maker officially began deliveries of its Tesla Model S car in the nation this quarter, and it plans to expand operations in the Chinese market in the quarters ahead. 

Tesla China Picture

Source: Tesla Motors.

Unlike other luxury automakers selling cars in China, Tesla said it would not mark up the price of its vehicles for sale in the Asian market.

Tesla plans to sell its 85-kilowatt-battery Model S in China for roughly 734,000 yuan. That converts to about U.S. $121,370, which includes what Tesla will pay in Chinese taxes, duties, and transportation costs. Tesla CEO Elon Musk said the company will eventually build a factory in China to help meet production demands.

Zipping ahead
Between Tesla's honest pricing strategy and better than expected subsidies in the world's largest auto market, the company's opportunity in China appears brighter than ever. Looking ahead, Musk says Tesla could end up selling more cars in China than it does in the United States. If he's correct, this could just be the beginning of a massive rally in Tesla's stock. Nevertheless, investors will gain more insight into what the future holds when Tesla reports earnings on Monday, Feb. 17.

How you can profit from China's auto market today
U.S. automakers boomed after WWII, but the coming boom in the Chinese auto market will put that surge to shame! As Chinese consumers grow richer, savvy investors can take advantage of this once-in-a-lifetime opportunity with the help from this brand-new Motley Fool report that identifies two automakers to buy for a surging Chinese market. It's completely free -- just click here to gain access.

Tamara Rutter 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