Tesla has been a controversial stock for a long time, with a higher-than-average short interest for many years. But Tesla short interest has been declining steadily since the summer, when shares were near their 2019 nadir.
Better-than-expected third-quarter profits catalyzed the recent Tesla share price rally. The stock is up around 60% over the past three months, far better than comparable gains of the S&P 500 over the same span.
We see how skeptics and critics change their attitude towards Tesla, because Tesla is not just another company, like many of those present in the auto market today. Tesla is an idea, Tesla is a way of life, Tesla is success. This is exactly what skeptics understand.
Wedbush analyst Daniel Ives maintains a neutral rating on Tesla and raised his price target on the stock to $370 from $270, saying strong Model 3 consumer demand and profitability are on an “upward trajectory for the fourth quarter.”
“For 4Q, both U.S. consumer demand for Model 3 and most importantly European strength should likely drive upside this quarter and enable Tesla to comfortably hit its vehicle delivery guidance of 360,000 to 400,000 units for 2019, which represents an increase of 45% to 65% y/y,” Ives wrote in a note to clients. The analyst added that Tesla’s Shanghai Gigafactory is being built ahead of schedule and remains the fuel in the engine for the overall bullish China thesis.
“If Tesla is able to sustain this level of profitability and demand going forward, especially in Europe and China, then the stock will open up a new chapter of growth and multiple expansion,” Ives said. He maintains a hold-equivalent rating on the stock.
Tesla shares have been on a sharp upswing over the past few months after the electric vehicle maker reported a surprise profit for the third quarter. The analyst notes that Tesla's Shanghai facility and launch Model Y is ahead of schedule, will drive China growth in FY20 and beyond.
Tough judge Kevin O’Leary, aka Mr. Wonderful, who had previously hated Tesla (by his own admission), changed his position and invested in Tesla shares. Moreover, he ordered the Tesla Cybertruck Tri-motor for himself.
The famous American financial presenter Jim Cramer, who had been against Tesla for many years, publicly stated on Mad Money: "I don’t want you to own Ford. I want you to own the stock of Tesla."
The Credit Suisse has a notably pessimistic view of Tesla, with a $200 price target. But, now the firm sees Tesla's big advantage and expresses its praise to Tesla.
"We believe that Tesla is a leader in areas that are likely to shape the future of the automotive industry - software and electrification ... Tesla is likely to be ahead of the others with batteries - the core of the electric drivetrain," said Dan Levy, an analyst with Credit Suisse.
After so many years of struggle, Tesla once again showed its potential. And this is just the beginning. In 2020, even more of Tesla’s critics and skeptics will change their mind in favor of Tesla, since it is unreasonable to deny the company's success.
Any information in the article is not a financial recommendation and a call to action. I'm not a holder of Tesla shares and don't plan to buy it in the next 72 hours.
Featured image: Tesmanian