Tesla (NASDAQ:TSLA) appears to be back in investors’ good graces, with TSLA stock up 10% in the past month. It’s been a topsy-turvy year for shareholders of the world’s leading electric vehicle manufacturer. After peaking just above $900 a share in late January, TSLA stock declined 37%, falling to a closing low near $563 in early March. After a brief run-up, shares bottomed out at that level once again in mid-May.
But the stock has been in an uptrend since early June, rising nearly 43% to reclaim the $800 level. This rally is fueling optimism that TSLA stock can achieve fresh all-time highs in the coming months.
Many analysts, including one at Wedbush, forecast that TSLA stock will hit $1,000 per share in the near term, driven higher by the opening of new production plants and rising global demand for electric vehicles.
New Factories and Sales Momentum
Tesla is opening new plants in Austin, Texas, and Berlin, Germany, which the company says will each begin churning out cars before the end of the year.
This comes as Tesla already announced record third-quarter deliveries that were up 73% year over year and blew away analysts’ expectations. More delivery details will be provided when Tesla reports its third-quarter earnings results on Oct. 20.
The opening of the new Austin production facility coincides with the company’s plans to relocate its global headquarters from Fremont, Calif., to Austin. CEO Elon Musk said Tesla will retain a presence in California and plans to increase production at the Fremont factory by as much as 50%.
In short, Tesla appears to be realigning its operations to capitalize on demand and remain atop the electric vehicle heap.
Regulatory Scrutiny and Rising Competition
For all its success, Tesla is facing some serious challenges right now.
The company is under investigation by the U.S. National Transportation Safety Board (NTSB) after several crashes potentially involving its driver-assistance system.
What’s more, the company’s long-awaited and heavily hyped full self-driving software has been widely criticized as a potential safety hazard. The rollout of Tesla’s self-driving software has been delayed several times, including as recently as Oct. 9.
At the same time, Tesla faces rising competition from both established automakers such as General Motors (NYSE:GM) and Ford (NYSE:F) that are going all-in on electric vehicles and a number of startups around the world, especially in China.
While it took Tesla more than a decade to produce 100,000 electric vehicles, Chinese rival Xpeng (NYSE:XPEV) built that many cars in only six years. Nio (NYSE:NIO) took just three years.
As electric vehicles become more mainstream, Tesla will have to go into overdrive to maintain its market-leading position.
The Bottom Line on TSLA Stock
Despite these challenges, the bulls appear to be running with TSLA stock. After suffering a steep sell-off in the spring and consolidating, shares have recovered and are again trending higher. The company’s strong performance appears to be underpinning the latest rally. Tesla’s shares managed to outperform throughout September when the broader market was selling off.
With deliveries and earnings beating expectations and a number of analysts upgrading the stock, now appears to be a good time for investors to again take a chance on the electric vehicle maker. TSLA stock is a buy.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
