It's hard to dispute the notion that Tesla (NASDAQ: TSLA) stock has been on a ride wilder than one of its ill-fated Autopilot trips this year. Yet as the year comes to its close, the stock got one last upward jolt thanks to a new report from Dan Ives with Wedbush. In the note released just a day after Christmas, Ives didn't alter the stock's rating—it's still stuck in neutral—but he did bolster the target stock price from $270 to $370. The news proved the kind of thing that might well make investors believe in Santa Claus again, as the shares were up 0.4% in premarket trading, and as of this writing, are well off Tuesday's close of $425.25.
What a Difference Seven Months Makes
The turnaround at Wedbush might come as a surprise to those who have followed Wedbush recommendations on Tesla stock for any length of time. Back in late May, Ives had another note for Tesla that featured a lowered price target from its previous $275 down to just $230. At the time, Ives noted that Tesla was facing significant pressure to cut costs, while also facing some issues of market demand and the potential difficulties posed by a chief financial officer with less than stellar levels of market experience.
The most recent note, meanwhile, addressed many of these points on its own. Ives noted that the fourth quarter demand for Tesla products, particularly the Model 3, should be fairly brisk. Between US and European consumer demand, Tesla was expected to readily hit its earlier-expressed delivery expectations of around 400,000 units total. That's a sales boost of between 45% and 65% year-over-year, Ives noted, and that's good news by anyone's reckoning.
An Increasingly Credible Operation
Ives further noted that Tesla is increasingly able to “...not just talk the talk but walk the walk,” a fact that hasn't gone unnoticed by investors. That's perked up investor optimism, and driven some gains in the share price as well. Granted, even Ives admits that Tesla's recent run-up has been in part due to what he called “massive short-covering”, but there are still some sound fundamental measures going on as well.
This isn't the first time that Tesla has defied the shorts, either; back in November, we found that Tesla short-sellers had lost a cumulative $1.4 billion betting against the company. We also noted recently some other points of gain in Tesla; Credit Suisse offered a note that Tesla had some great potential gains afoot thanks to its battery technology, which was on track to outpace the battery capacity of every other car manufacturer on the planet. Credit Suisse's recent reconsideration of Tesla stock came after a much more dour outlook back in mid-November.
An Increasingly Diverse Operation Drawing Imitators
There are some other signs that Tesla has come into its own, as well. One of the biggest was the recent receipt of a $1.4 billion loan to expand its giga-factory in Shanghai, a point that suggests Chinese demand for Tesla products—especially once again the Model 3—might be on the rise in the near-term as well. With trade war issues still in play but seemingly on the decline, having such a presence in that market may give Tesla some significant advantages in reaching the massive Chinese market.
China's internal efforts at producing a Tesla-esque company are proving less than effective as well, with companies like Nio (NYSE: NIO) and XPeng delivering some sour results. With government subsidies starting to give out, reports note, the end result is that Tesla may prove ultimately to be the biggest name in Chinese electric vehicle manufacturer.
All of this puts Tesla in a position that's almost surprisingly good. Perhaps the best part of the picture is the report from Credit Suisse about Tesla's battery fortunes. While certainly, electric cars are going to be a healthy part of Tesla's bottom line, the notion of a whole-house battery could really take off. We've already seen whole-house generators gain in popularity in California, where PG&E continues to have issues with providing power to homes in the event of high winds. Being able to hand off to solar panels and a truly effective storage battery could be exactly what eco-conscious California has been waiting for.
With the company visibly turning its fates around—just look at the May-December difference from Wedbush itself—and even beginning to diversify into battery products, the notion of Tesla being a “someday stock” isn't too far out of line. The big news is that Tesla's someday may be showing up in 2020.