Tesla shares soar as analysts signal further gains News ad

Tesla today

$352.57 +1.15 (+0.33%)

(As of 11:45 a.m. ET)

52 week range

$138.80

▼

$361.93

P/E ratio

96.59

Target price

$243.75

Shares Tesla Inc. NASDAQ:TSLA We have a phenomenal second half of 2024. Electric vehicle (EV) stocks are up an impressive 150% since April, hitting their highest level since 2022. With the stock now less than 20% off its all-time high, it’s easy to see why so many investors are bullish, especially considering how little a tech giant like Tesla needs to close the gap.

This surge was fueled by an unexpected catalyst: founder and CEO Elon Musk’s close relationship with President-elect Trump—more on that below. For now, let’s just say there are a few reasons why investors should be excited about the Austin-based company, chief among them the potential for the stock to be even closer to all-time highs by Christmas.

Tesla Fundamental Results: A Turnaround in the Making

First, let’s look at the company’s fundamental performance indicators. Admittedly, Tesla’s financial performance this year has been mixed. The company missed analysts’ expectations in nearly all of its 2024 earnings reports, contributing to the stock’s early weakness. Falling demand and rising costs have exacerbated the problem, pushing revenue down year-on-year and putting pressure on profitability.

However, it is beginning to seem that these problems are now in the rearview mirror. The company beat EPS expectations with its last earnings report in October, while posting record revenue. The potential for improvement in 2025 is attractive, especially given that the new administration is likely to create favorable conditions for domestic manufacturing and renewable energy industries.

Bullish Analyst Updates Signal Strong Confidence in Tesla’s Growth

With that in mind, some analysts are optimistic about Tesla’s chances of maintaining its upward trajectory. Note to clients team Roth Mkm called Tesla a strong buy this week, citing “an abundance of positive catalysts.” Stifel Nicolaus and Royal Bank of Canada, which also recently issued bullish ratings and price targets, share the optimism..

Roth McM’s update underscored Tesla’s growing appeal to conservatives historically skeptical of electric vehicles, thanks in large part to Elon Musk’s embrace of Trump’s pro-business agenda. This shift has opened up new channels of demand for Tesla, bolstering its credibility and long-term growth potential.

The new price target is especially attractive given the stock’s close on Tuesday. Stiefel Nicolaus’ $411 implies upside potential of nearly 20% from current levels, putting Tesla on track to hit 2022 all-time highs. With excitement only likely to increase as Trump approaches his inauguration in January, there is every reason to believe that this level is very important.

Risk sentiment and S&P 500 highs create market tailwind for Tesla

Even despite all the positive dynamics, some analysts are expressing concerns. UBS Group reiterated its Sell rating last month, while Jefferies maintained a Hold rating around the same time. These analysts point to Tesla’s meteoric rise over the past six months and point to the lack of consistent, better-than-expected earnings as a reason for caution.

However, Tesla has a history of its stock outperforming fundamentals, and the broader market environment is certainly supportive. The S&P 500 is hitting new all-time highs and the Fed’s rate cuts are adding to risk sentiment.

Let’s take part: Tesla is ready for a strong finish

There’s a lot more to like than to dislike about Tesla in the last few weeks of the year. Their fundamentals are showing signs of returning to growth, their CEO has a very cordial relationship with the new president, and the broader macro environment is supporting growth stocks like Tesla.

The fact that the stock is steadily making higher highs speaks volumes, while the high proportion of analysts calling the stock a strong buy cannot be ignored. Investors should expect Tesla shares to continue to rise through the holidays, with a close above $365 confirming they are ready to move into $411 and blue sky territory.

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