Tesla (TSLA) Continues Upward Climb, Clearing $900 Mark

Some might call it one of the biggest success stories of the new millennium. Others might just call it confusing. Roth Capital's Craig Irwin referred to it as “insane.” What company's stock is drawing this kind of baffled, puzzled, and occasionally exuberant attention? It's none other than Tesla (NASDAQ: TSLA), who with today's trading has cleared the $900 per share mark. As of this writing, it's up just a hair past the $930 per share mark, and that's got the market wondering just what in the world is going on here.

How Does a Stock Almost Quadruple In Four Months?

Looking at a five-year graph of Tesla only raises more disturbing and largely unanswerable questions. Back in October of 2019, when most of us were looking forward to Halloween fun and largely unaware of a winter full of preposterous weather to come, the stock was pretty much right at the same place it had been for the five years preceding it: about $250 per share. But right about November, the stock started an upward incline that looked nearly vertical on a five-year graph.

It's a move that delivered yet another blow to Tesla short-sellers, who according to word from S3 Partners are now down a little over $8 billion just since the year started. With bull cases on the stock recently proffered by ARK Invest now projecting levels as high as $15,000 per share by 2024, it's starting to seem like nothing is impossible for Tesla.

This most recent rally is said to be the result of analysts hiking price targets just to match the stock's current performance, as well as investors frantically covering shorts. The new 12-month average price target is sitting at $493, still almost half of the stock's current value.

FOMO On An Epic Scale?

Irwin had a little more to say about why Tesla stock is screaming upward, suggesting that the fear of missing out, or FOMO, is driving a lot of Tesla's most recent gains. Institutional investors who formerly scoffed are now perhaps wondering if there's more to Tesla's story than the surface suggested are now buying in and driving huge screaming upticks.

Yet there are those who believe that Tesla's upward story has only begun. Ron Baron noted that Tesla could hit $1 trillion in revenues in 10 years, and the growth may not stop there. Such a forecast would have been ludicrous six months ago, looking at a company whose stock price was as moribund as a cinderblock in hip-deep mud. Now...now it takes on a whole new and almost frightening life.

It's Not All Sunshine and Lollipops for Tesla

Even as Ron Baron describes a story that started out ludicrous but quickly began to look prophetic, there are those who are waiting for the pratfall. There are, of course, the short-sellers who appear stymied on a regular basis, but there are others as well, like Ralph Nader. Nader not only looks for Tesla stock to collapse, but also for the entire “stock market bubble” to “implode.”

Adam Jonas with Morgan Stanley, meanwhile, stuck to his guns, calling Tesla “underweight” and holding to a price target of $360, which seems downright lunatic given the stock is nearly triple that figure. But Jonas explains that his target is based on two million units sold by 2030, and sold with a 15% earnings before interest, taxes, depreciation and amortization (EBITDA) margin. Jonas did, however, note that electric cars do seem to be gaining in popularity, noting that four different car companies had Super Bowl ads that boasted electric vehicles.

Where We're Going, There Are No Roads

For Tesla to hold onto these gains, it's going to have to show some impressive progress, and right now, it sort of looks like the low-hanging fruit has been consumed. While Tesla had high hopes for a hit in the Chinese market, the Chinese market seems to have collapsed as coronavirus fears sweep through most of the still-locked-down cities therein. With businesses “temporarily” shuttered—Apple (NASDAQ: AAPL) stores and offices are closed until February 9 at last report—that's going to weigh heavily on Tesla's hopes to sell cars into that space, not to mention its hopes of making the S&P 500.

It's not all bad news for Tesla. The world is thinking twice about electric cars, and the technology is certainly improving. Throw in Tesla's impressive battery prowess and a market that would love to buy better household batteries for backup against grid failure—California especially so after all those PG&E blackouts—and there's a real possibility for Tesla going forward.

While Tesla will likely never be as big as some project, it likely won't be a complete failure. Only time will tell at what point in the vast crevasse of middle ground it ultimately lands.