Tesla Motors (TSLA) remains a momentum darling despite recent volatility, up almost 450% in 2013 thanks to a massive short squeeze and favorable earnings. But can Tesla stock keep up its run?
Maybe. But even if the trend does continue higher, expect a much bumpier ride in TSLA.
On the bull side, Tesla has a strong backlog for its Model S sedan and earnings continue to impress Wall Street. In fact, Wedbush just upgraded its rating on TSLA to “outperform” from “neutral” with a $240 price target amid optimism about Tesla stock.
Tesla Motors gapped higher Tuesday, but will it last?
TSLA Outlook Demands Perfection
Recently, Baird issued a TSLA downgrade that spoke to unrealistic investor expectations. In their downgrade of Tesla stock, Baird analysts wrote that “solid execution” was already priced into the stock. In essence, TSLA really only has downside risk because the TSLA bull run seems to predict nearly flawless performance going forward, and it’s almost impossible to exceed such sky-high expectations.
Tesla stock recently hit a 52-week high above $194.50, and (assuming nearly flawless performance) it’s hard to say just how high TSLA could ultimately go in the long-term. After all, the Model S has proven there’s strong demand for luxury electric vehicles, and it will be some time before major automakers like General Motors (GM), Ford (F) or Toyota (TM) can go toe-to-toe with TSLA.
But in the short-term, it’s undeniable that Tesla stock has a bumpy road ahead as it looks to meet super-high expectations and continues to ride a wave of incredibly strong short interest from bearish investors.
So whatever your position in TSLA, bullish or bearish, you should expect a rocky ride for the rest of 2013 and into 2014.
Related Reading on Tesla Stock
- Why Tesla could see a big drop. (Talking Numbers via Yahoo Finance)
- Analyst sees 33% in additional upside to TSLA. (Money Beat via WSJ)
- Tesla investors aren’t prepared for any kind of disappointment. (CNBC)
- Will the Twitter IPO be the next Tesla-like offering? (The Slant)
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.