Will Tesla shares continue to rise after their record high?

  •   28/01/2020 - 12h00
  •   Adeline HARMANT

While Tesla's share price has recently reached record highs, it is questionable whether the stock will continue its bullish rally in the coming weeks and months or whether we should, on the contrary, expect a bearish turnaround in this value. We offer you our help and analysis to invest well in this stock.

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Will Tesla shares continue to rise after their record high?
Image copyright: Automobile Italia - Flickr

A record increase after waiting for the $100 billion market capitalization :

In the last few trading sessions, investors who had taken a position on Tesla's share price were not disappointed, as the stock gained many points, including up to 11.5% in just two trading sessions after a very important announcement.

Indeed, at the beginning of last week, the American group specializing in the construction of electric vehicles announced that it had crossed the $100 billion market capitalization threshold for the first time in its history, and more precisely, 102.$66 billion at closing. It should be noted that this capitalization is thus twice as high as that of its direct competitor, General Motors, and three times as high as that of Ford Motors. Tesla is also ahead of German carmaker Volkswagen, which has a capitalization of 90 billion dollars and whose boss was recently concerned about Tesla's market growth.

Following this announcement and the rapid point taking of Tesla stock, some brokers did not hesitate to give buying recommendations with a price target raised from $530 to $800.


Other data to be taken into account in the analysis of the future of the Tesla share :

Several other data support a scenario of rising Tesla's share price over the medium to long term. It is worth noting in particular that the American group, specialist and leader in electric cars, has just bought over 300 hectares of land on the outskirts of Berlin with the aim of opening its very first factory in Europe in the near future. Indeed, it should be remembered that the group had already announced in November its intention to build a giant factory in Gruenheide. It is therefore no surprise that the green light was given to this new project by the Board of Directors.

On the other hand, the Tesla Group also responded to accusations of speeding up a petition citing 127 clients, which the U.S. National Traffic and Safeti Administration is to consider. Brian Sparks, who is the author of this petition, is also an investor who is betting on the stock's decline. Tesla announced on its blog that it has reviewed each alleged case of acceleration, adding that the data proved that the vehicle was functioning properly and accused the petition of being a fake.

Finally, Tesla has also been in the news since yesterday's session after reaching $100 billion in market capitalisation. This capitalization puts it ahead of its competitor Volkswagen and supports a strong current upward trend.


Is he sure the Tesla title will continue to gain points?

Most traders who are interested in Tesla stock feel prepared to hold a buy position in this stock given its recent point gain.

However, while all of this data suggests that Tesla may continue to rise, some analysts are advising selling Tesla as it would be overvalued after doubling in the last three months and at a time of high risk aversion. Among the negative points for this value is that we are currently seeing a gradual reduction in tax credits for electric vehicles. While this data seems to be ignored by the market for the moment, it could, in the longer term, penalize the group by reducing its sales volume.

Other brokers are leaning towards a neutral value for the Tesla share but do not hesitate to raise their target, for example, to $555 compared to $400 previously for Exane BNP Paribas.