Tesla’s stock jumped after a rough start to 2019…
Tesla’s stock rose 10% last week and the company continued this forward momentum on Monday. The stock rose an additional 4.5%, which has many speculating that the company is finally getting back on track.
Baird analyst Ben Kallo reiterated the company’s buy rating and set its price target at $340. This could be overly generous considering the company’s stock has been falling for most of 2019.
But Kallo wasn’t the only analyst who seemed to be feeling upbeat when it comes to Tesla…
An analyst from Roth Capital Partners upgraded the company from neutral to buy.
Making the case for Tesla
Tesla has given some indication that it could meet or even exceed investor expectations in the coming months. For one thing, the company boosted its order and delivery activity considerably.
According to CEO Elon Musk, there is a strong demand for the company’s vehicles. And Tesla is working to substantially increase its deliveries after pretty dismal first-quarter results.
To do this, the company is incentivizing its employees to work more efficiently. Tesla is offering a $1,200 bonus to sales employees and a $500 bonus to delivery employees if the 33,000 vehicles are delivered in June.
If the June deliveries hit 36,000, the company will double the bonuses. And according to Wall Street analysts, there were more Model 3’s registered in April and May than during the entire first quarter.
Uncertainty still lingers
However, changes in government subsidies could affect the ordering activity of Model 3’s. On July 1, the federal tax credit for Model 3’s will fall from $3,750 to $1,875. Once these changes take effect, this could cause a lull in orders.
And Tesla will likely see a drop in orders from China over the coming months, which is its largest international market. The company’s sales had already started to decline at the end of 2018 and will likely continue to fall as tensions increase between the U.S. and China.
Tesla’s large debt load is another factor that has long concerned Wall Street analysts. Morgan Stanley recently cited the company’s debt load and geopolitical exposure as causes for concern.
Even still, the company’s recent momentum is encouraging and it seems like Tesla could meet its 2019 sales objectives. Analysts will undoubtedly pay close attention to the demand for the company’s vehicles in the coming year.
Do you think Tesla will ultimately thrive — or fail? Leave a comment below.
