Tesla Shares Surge Past $1,000 (NASDAQ: TSLA)

Holding Tesla shares in 2020 has not been for the faint of heart. The electric-car maker’s stock burst out of the gates at the start of the year and had doubled by the end of January to fresh all-time highs of $969/share. Shares then fell more than 60% through the middle of March as investors dumped equities en masse and fled to safety. But the risk-on environment that’s swept markets back to record highs in the three months since, has also pushed Tesla’s shares 200% higher as well.

This has sent the stock above January’s highs and a solid 9% jump in Wednesday’s session alone sent them above the fabled $1,000/share level for the first time ever. With shares trading hands for as much as $1,027 during Wednesday’s session, Tesla now joins the ranks of some illustrious tech names like Amazon NASDAQ: AMZN and Google NASDAQ: GOOGL whose shares also trade in the four digits.

But what’s behind this latest jump and should investors be concerned about a bubble?

Recent Catalysts

The coronavirus pandemic disrupted the world’s supply lines and put a large dent in consumer demand, on a scale and at a speed never before seen. But it feels like there’s been a constant stream of good news that’s added fuel to the growing fire for speculators in recent months. Reports this week that sales of Tesla’s Model 3 vehicles in China tripled in May compared to April confirmed to investors that demand remains strong for Tesla’s electric cars and pent up demand from March and April is finally being released.

As Wedbush’s analyst, Dan Ives, said in a note to investors this week, "we believe with demand for Model 3's ramping stronger than expectations in China heading into summer timeframe, the lockdown easing in the US/Europe, and some potentially 'game-changing' battery developments on the horizon (Battery Day likely in late June) that Tesla's stock likely has room to run further."

Wall Street has also seen reports this week that CEO Elon Musk is interested in bringing his electric semi-commercial truck to volume production too. This was seen by many as a response to the jump in share price of their closest competitor in the electric truck space, Nikola Corp NASDAQ: NKLA. Nikola’s shares popped big time on Monday and Tuesday to put them up more than 600% in less than a month. It’s clear traders are viewing them as a potential new Tesla and aren’t afraid to take a punt.

To be sure, however, for a company that has been at the forefront of the ongoing shift to electric cars, it’s promising to see Tesla eager to expand its footprint and increase their hold of the freight and trucking market as well.

Buying at these Levels

Long time Tesla perma-bull, Ron Baron, isn’t taking any profits off the table just yet. He told CNBC on Tuesday that he sees the share price hitting $3,000/share within five years and sees their revenue at $1 trillion within ten. Stretch goals indeed.

For investors considering getting involved in Tesla for the first time at these levels, a medium to longer-term time frame like Ron Baron's is probably needed. The stock has shown it is well able to move in either direction once it sets its mind to it and with RSI creeping towards the 80 mark, it feels a little frothy and top-heavy, in the short term at least.

That being said, if this forecasted second wave of coronavirus hits and sends equities into a free dive once again, you can be sure all eyes will be on the likes of Tesla to jump in when the selling stops.