Tesla share price zooms past US$420. More gains coming?

As Tesla’s share price keeps setting new records, there’s one question on the minds of investors: Is US$500 within reach?

The holiday season is here, and it’s pedal to the metal for Tesla Motors, Inc (Nasdaq: TSLA).

The US electric car maker saw share price hit a new historic high of US$425.47 on Christmas eve, 24 December, smashing analyst predictions.

This record-breaking number comes after two straight months of gains, in which share price has grown over 65% since late October.

Year-to-date, the company’s stock value has skyrocketed a whopping 140%, minus a dip in June.

Is US$500 per share within reach?

With an already mega-successful year behind it, is a share price of US$450 – or dare we say it, US$500 – within reach in the first six months of 2020 for Elon Musk’s baby?

That appears to be the question on the minds of many investors, as share price continues to soar.

Being that it is the decade’s most successful auto company in terms of valuation, and the third largest – behind only Toyota and Volkswagen – it does seem like the sky is the limit for a company that was founded only 16 years ago.

At present, the current 12-month consensus among 33 polled investment analysts by CNN is to buy shares in Tesla Inc. This rating has held steady since the first poll in December, when it was unchanged from the buy rating recorded throughout November.

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Favourable conditions

The self-professed technology company has several factors going for it that could see it hit new heights.

  • Steady production pipeline and sales

Tesla has steadily increased vehicle output quarter-on-quarter since 2014. In Q1 of that year, the company produced around 41,000 vehicles.

This year, the company has already delivered 260,303 units in the first three quarters, and based on previous pattern, is well on track to surpassing the 300,000 mark.

Production output for 2019 so far has also exceeded the whole of 2018.

Deliveries are up nearly 150% since 2017 – the second-best performing year for share sale after 2019. This number is set to get bigger, with Q4 2019 figures still unreported.

  • Returned to profitability in Q3 of 2019

The smart car company also exceeded industry estimates by posting a profitable third quarter, following a dismal Q2 FY2019.

Tesla earned a net income of US$143 million for Q3, or US$1.82 per share, higher than the loss of US$0.46 per share that analysts had predicted.

Comparatively, it had lost US$408 million in the preceding quarter, and US$702 million in Q1 this year.

Finally, free cash flow for the third quarter was US$371 million, well above the industry estimate of US$32 million.

  • Growing global footprint

Tesla’s new Cybertruck had launched to much fanfare earlier this year, receiving an estimated 250,000 initial deposits in just less than a week.

The state-of-the-art, energy-efficient four-wheeler, which has been described as ‘revolutionary’ by critics, is expected to begin production by 2021.

Earlier this year, Tesla also opened its first production facility overseas in Shanghai, China. The Shanghai gigafactory is currently rolling out the Model 3, which are due to hit showrooms all over the country starting January 2020.

The company expects to manufacture 150,000 Model 3 vehicles annually at the China factory.

Musk also tweeted in November 2019 that a similar plant will also be opened in Berlin, Germany, producing the upcoming Model Y, and its best-selling Model 3.

With such a packed roadmap, existing investors would be happy to know that Tesla is en route to bigger and better things in the coming year. Do stay tuned to IG.com for all the latest updates and analysis regarding Tesla's stock price movements.

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