Tesla's (TSLA) Relentless Rally Remarkable, More Upside Left

Tesla TSLA is in a solid position at the start of 2020 and investors are more than happy. The electric vehicle (EV) pioneer carved out yet another fresh high of $471.63 yesterday, before closing the session at $469.06. Tesla has been on fire lately and the extended rally has helped the company become the most valuable U.S. auto maker ever. Notably, the firm’s market cap has zoomed above $82 billion, surpassing Ford’s F peak of $80.81 billion in 1999. In fact, Tesla’s market cap is currently almost as much as General Motors GM and Ford combined.

The company’s flamboyant CEO Musk was literally dancing with joy onstage during a ceremony held yesterday at Shanghai Gigafactory, celebrating the delivery of the first China-built Model 3 cars to the public out of the factory. During the ceremony, Musk also confirmed plans to begin work on a production program for the company’s Model Y crossover in Shanghai Gigafactory. Notably, this was the second China ceremony for Tesla in less than a month. The first was on Dec 30, 2019 when the firm rolled out its first Model 3 cars built at Gigafactory 3 and delivered it to 15 of its employees.The company has already managed to manufacture over 1,000 saleable cars at its Shanghai factory, despite breaking ground less than 12 months ago.

To lure customers to the world’s biggest EV market, Tesla announced a 9% price cut on its China-made Model 3.Its retail price is now 299,050 yuan. Considering the international popularity of Tesla, the price tag makes it competitive compared to other Chinese rivals like NIO Inc. NIO whose popular SUV ES6 is priced at around 358,000 yuan. Though China’s economy has been hurt by the ongoing trade war with the United States, demand remains high for Tesla cars. And if the trade war is completely resolved in 2020, the sky is the theoretical limit for Tesla stock.

Over the past six months, the stock has more than doubled and the rally does not seem to stop. So, what’s behind this bullishness? Well, Tesla’s blowout third quarter, impressive progress at the Shanghai Gigafactory, Giga 4 plans in Berlin and unveiling of the two vehicle models, including the crossover SUV Model Y and Cybertruck, have boosted investors’ optimism. Rising demand for Model 3 vehicles is also a major catalyst. Tesla reported stronger-than-expected deliveries for the fourth quarter. The company produced a record 105,000 (86,958 Model 3 and 17,933 Model S and X) vehicles and delivered record 112,000 (92,550 Model 3 and 19,450 Model S and X) vehicles. This pushed 2019 total deliveries to 367,500 vehicles, up 50% from 2018 and within its guidance range of 360,000-400,000 vehicles. All these factors have made Tesla one of the red-hot stocks now.

The company, which has indeed taken the financial markets by storm, is poised to maintain its bull run. Considering the tailwinds and excitement surrounding Tesla, the stock could soon cross the $500 mark. This Zacks Rank #2 (Buy) stock is a robust long-term investment based on its market leadership, progressively broadening global operations and new product developments that are going to take the company to new heights. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

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