Tesla Stock Performance Outshines Bitcoin After Latest Rally - Motley Fool

The past year has been a good time to own Bitcoin. Yet it's been even better to be a Tesla (NASDAQ:TSLA) investor.

Bitcoin's price has surged by more than 165% over the past 12 months. The popular cryptocurrency has seen its price boosted in recent months as investors have sought a "chaos hedge." This is a term used to describe an asset that rises in value during periods of great fear and uncertainty -- such as that which has been brought about by trade wars between the U.S. and China and heightened military conflict in the Middle East -- and can be used to offset losses on other assets that decline in value during these volatile periods.

The recent outbreak of coronavirus, which has sickened more than 20,000 people around the world and resulted in the deaths of over 400 people, has only served to increase fear and uncertainty among investors. Bitcoin's price has unsurprisingly risen sharply in recent weeks against this backdrop, and the cryptocurrency's ascent could certainly continue in the coming days and months.

Yet even Bitcoin's torrid gains have been surpassed by those of Tesla's stock. The electric vehicle maker's shares have surged by a staggering 116% so far in 2020  and a total of 187% over the past year. 

Image source: Getty Images.

A host of powerful factors have combined to propel Tesla's stock price to dizzying heights in recent days.

A series of analyst price target increases helped to kick Tesla's share gains into high gear. On Jan. 21, New Street analyst Pierre Ferragu boosted his target price to $800 from $530, citing Tesla's "technological dominance" and the "strong sustained demand" for its vehicles. The next day, Wedbush analyst Daniel Ives jacked up his price target by nearly 50%, based in part on his growing bullishness on Tesla's growth opportunity in China.

Tesla's gains accelerated following its blockbuster fourth-quarter results, which saw the hard-charging company's revenue and earnings per share come in nicely above Wall Street's expectations.

The stock's rise steepened after analysts at investment firm ARK Invest laid out an incredibly bullish forecast for Tesla's shares. "Based on our updated expectations for electric vehicle (EV) cost declines and demand, as well as our estimates for the potential profitability of robotaxis, our 2024 expected value per share for TSLA is $7,000," the firm said. Tesla's stock was trading for less than $700 at the time.

That brings us to today. Tesla's stock finished the trading day up another 13.7%, to $887.06 per share, after rising more than 20% earlier in the day. This latest jump in Tesla's stock price came after major shareholder Ron Baron said the automaker's revenue could rise to as much as $1 trillion within a decade -- up from $24.4 billion today -- during an interview with CNBC.

Volatility cuts both ways 

While it has no doubt been quite a ride for Bitcoin and Tesla owners over the past year, investors should brace themselves for a possible sharp pullback in both assets' prices.

Bitcoin's price is notoriously volatile. And while the cryptocurrency could certainly continue to ascend to new heights -- particularly with the "halvening" only months away -- it could also just as easily see its price turn sharply to the downside.

As for Tesla, many people are understandably rooting for its success. Electric vehicles can be part of the solution to the threat posed by climate change -- something we'll all likely be thinking about a lot more in the coming years.

But while the bulls will have you believe that there's nothing but upside ahead for Tesla, the stock may have gotten ahead of itself in recent days. That's because, in addition to the bullish catalysts mentioned previously, it's likely that a massive short-squeeze -- forced buying by short sellers who have suffered sizable losses -- is also contributing to Tesla's recent gains. So it's possible that Tesla's stock could pullback violently once this buying pressure abates.

As such, Bitcoin and Tesla investors should brace for sharp moves to both the upside and downside in the days ahead.

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2020-02-05 00:05:00Z
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Why the Dow is rallying more than 400 points in middle of a global health crisis - CNN

It's an abrupt turnaround for markets. Stocks had sold off sharply last week amid worries about the economic impact of the virus. But stocks began to retrace their sharp losses on Monday.

The Dow (INDU) was up 450 points or 1.6% in late morning trading. The S&P 500 (SPX) rose 1.5%, while the Nasdaq Composite (COMP) was up 1.7%.

And the rally isn't just confined to US markets: global equities are all in the green, and even Chinese markets, which recorded their worst day in years Monday, bounced back.

But the global coronavirus is still not over. So what's behind the excitement?

Chinese stimulus

The People's Bank of China stepped in this week by injecting billions of yuan to prop up the stock market.

And there might be more: China has helped its markets out in times of trouble before. Back in 2015, when the country's stock bubble burst, authorities lent billions to brokerage firms to encourage stock buying.

The historical evidence that China is willing to help its markets and economy soothed investors around the world.

"The underlying market hope is clear: central banks will save us, not just from the business cycle, and not just from climate change, but now from global pandemic too," wrote Michael Every, senior Asia-Pacific strategist at Rabobank.

China is the world's second-largest economy and is considered the engine for the global economic growth. With a central bank willing to lend a hand, the repercussions from the outbreak could be much more manageable.

Containment

The coronavirus has now infected more than 20,000 people and claimed more than 400 lives, but the rate of new infections appears to have slowed down.

"Public health activities and awareness are key drivers," said Bespoke Investment Group Co-Founder Justin Walters.

Quarantine measures and travel restrictions -- imposed by both governments and companies -- seem to be doing the trick.

Solid economic fundamentals

While the outbreak has been raging, economic fundamentals have remained solid for the United States.

On Monday, the Institute of Supply Management's manufacturing PMI beat expectations and showed the first expansion for the sector since July.

US factory orders for December also beat expectations on Tuesday, rising 1.8%, compared with the consensus estimate of 1.2%.

Friday's jobs report is expected to be yet another strong showing for America's labor market, including an unemployment rate around the 50-year low of 3.5%.

With an unemployment rate this low and wages ticking higher, American consumers, who are the backbone of the economy, are strong.

On top of all this, a solid earnings season for American companies also provides a positive backdrop for the market.

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2020-02-04 16:22:00Z
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Dow Jones Today, Stocks Jump As China, Chip Stocks Rally; Tesla Gets A Trillion-Dollar Forecast - Investor's Business Daily

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1. Dow Jones Today, Stocks Jump As China, Chip Stocks Rally; Tesla Gets A Trillion-Dollar Forecast  Investor's Business Daily
2. Wall Street jumps 1% at open as China stimulus calms investor nerves  Investing.com
3. Dow rallies 350 points as stock market extends coronavirus rebound  MarketWatch
4. Dow Jones Futures: Stock Market Rally Soars, But Is Tesla Overheated? Google Stock Falls On Revenue; Apple Supplier Due  Investor's Business Daily
5. Dow surges a second day as manufacturing data, strong earnings offset coronavirus fears  The Washington Post
6. View full coverage on Google News

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2020-02-04 14:49:00Z
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Tesla Stock Jumped 20%. It Makes No Sense. - Barron's

Tesla shows off the storage space in one of its cars. Photograph by Jordan Strauss/Getty Images for Tesla

Tesla shares rose almost 20% Monday, hitting another all-time high. The question is why? The move, frankly, baffled investment pros.

Few dispute things are looking up for the electric vehicle pioneer, but few understand the magnitude and persistence of the rally. The pros, however, offered a few idea when asked. And some even guessed what could be next for shares.

But first a run down of recent numbers. They are incredible. Monday was the largest percentage increase in Tesla (ticker: TSLA) stock since May 9, 2013, when shares rose 24.4%. The shares are up more than 86% year to date and up almost 150% over the past 12 months, crushing comparable gains of the S&P 500 and Dow Jones Industrial Average.

Tesla shares are up 336% from their $178 52-week low. The rally off the June 3, 2018 low has created about $109 billion in shareholder value. That is more than the market capitalization of General Electric (GE). Just incredible.

(Oh, by the way, Tesla stock opened up 13%, at about $883 a share on Tuesday morning. )

Now for the 20% move. On Monday, one analyst at a smaller brokerage firm suggested Tesla shares could hit $7,000 by 2024 Monday. It is a bold call, but it isn’t the reason shares rocketed higher. Wall Street has influence, but not that much influence.

Analysts, for the most part, have been chasing Tesla’s rally, just like investors. Wall Street’s consensus price target for Tesla stock has gone from about $300 a share to $500 a share over the past three months. It is a large move, but it lags behind far behind even the year-to-date gain in Tesla stock.

The biggest fundamental news anyone could point to Monday was an earnings report from Tesla battery partner Panasonic (6752.Japan). Management talked about profits from a North American battery facility and improving utilization. Profits on batteries for Panasonic, even while Tesla—the user of the batteries—is profitable, is a sign battery costs are falling. It is good news. But whether it is 20% worth of good news is still debatable. After all, that works out to about $25 billion in Tesla market value.

That leads to the inevitable short-squeeze explanation for the violent stock rally. Tesla shares are more heavily shorted than average, meaning lots of bearish investors have borrowed stock and sold it, betting on price declines. If the price falls, they can buy shares back at a lower price, replace the borrowed stock, and pocket the price difference.

The shorts, in the case of Tesla, are getting slaughtered. Short interest data provider S3 Analytics notes bears have been covering short bets lately, but Tesla remains one of the most heavily shorted stocks in the market. The shorts lost more $2.5 billion on Monday alone. Year-to-date losses exceed $8 billion.

The biggest risk traders see is the parabolic move in Tesla’s share price. Traders prefer stable, consistent gains. And when stocks get far away from their moving averages, traders start to worry. Stocks, of course, go up and down. And moving averages are levels where stocks often pause when rallying off lows, or dropping from highs. Tesla’s 50-day moving average is about $450 a share. It is unusual when a stock is more than 70% higher than its 50-day moving average. That makes traders nervous.

There is a saying in the stock market that the market will cause the most pain for most investors most of the time. It is a useful rule of thumb. It means you never can tell what the stock market will do over a short period.

In the case of Tesla, investors were sure the rally couldn’t continue. So, of course, that’s just what happened.

Write to Al Root at allen.root@dowjones.com

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2020-02-04 14:38:00Z
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5 things to know before the stock market opens Tuesday - CNBC

1. Dow to open nearly 400 points higher

Traders work on the floor at the New York Stock Exchange, January 14, 2020.

Brendan McDermid | Reuters

U.S. stock futures were pointing to a nearly 400 point gain for the Dow Jones Industrial Average at Wall Street's open Tuesday. The Dow had been up 350 points at one stage on Monday but closed 143 points higher. Tuesday's indicated gains coupled with Monday's advance would put a major dent in the Dow's 603-point slide from Friday. Tesla jumped another 15% in Tuesday's premarket, and it is set to open on Wall Street at a new record high. Major shareholder Ron Baron forecast the company would top $1 trillion in revenue in a decade. As investors who bet against the stock scrambled to catch up, Tesla climbed nearly 20% on Monday to $780. Investors are still watching coronavirus developments as well as awaiting delayed Iowa caucus results, President Donald Trump's State of the Union address Tuesday night, and the Senate impeachment trial vote Wednesday.

2. Google-parent Alphabet falls after revenue miss

Carsten Rehder/picture alliance via Getty Images

Shares of Google-parent Alphabet were falling about 3% in the premarket after the tech giant beat estimates with quarterly earnings but fell short on revenue. Alphabet broke out YouTube and cloud revenue for the first time. YouTube ads generated $15.15 billion in revenue in 2019, with $4.72 billion in the fourth quarter. Google's cloud business generated $8.92 billion in revenue in 2019, with $2.61 billion in Q4. This was the first earnings report since co-founders Larry Page and Sergey Brin announced in December they were stepping away from day-to-day operations.

3. Disney to report earnings including Disney+ launch

The new Continue Watching area in Disney+.

Todd Haselton | CNBC

Disney reports fiscal first quarter earnings after the bell Tuesday. Analysts expect the media giant to deliver per-share profit of $1.46 on revenue of $20.78 billion. The results from Q1, which ended in December, include the launch of Disney's streaming platform Disney+, which competes with platforms like Netflix, Amazon Prime Video and Apple TV. Disney signed up 10 million subscribers on its first day. Investors will be looking for any guidance on how the coronavirus might impact earnings going forward, with Shanghai Disney temporarily closing as of late last month and many dark movie theaters in China.

4. Coronavirus deaths in China rise to 425 with over 20,000 confirmed cases

The medical staff visit occupants in a hotel accommodating isolated people in Wuhan in central China's Hubei province Monday, Feb. 03, 2020.

Barcroft Media | Getty Images

Chinese health officials said 425 deaths and 20,438 cases of coronavirus have been confirmed in the country. Hong Kong's Hospital Authority told CNBC that a 39-year-old man had died in the city's first coronavirus-related death. Singapore and Thailand each reported six new cases of coronavirus Tuesday. While many countries confirm their own cases, the vast majority are still in China. The Philippines on Sunday reported the first death outside China.

5. Democratic Iowa caucus results delayed by technical glitches

Volunteers tally votes during the first-in-the-nation Iowa caucus at the Southridge Mall in Des Moines, Iowa, U.S., on Monday, Feb. 3, 2020.

Al Drago | Bloomberg | Getty Images

Democratic results from the Iowa caucuses, the first-in-the-nation presidential nominating contest, were delayed Monday night. The state's Democratic Party said a "reporting issue" caused "inconsistencies" in some data. A source told NBC News that technical glitches hit an app for reporting results and a backup phone line for relaying information was "a disaster." The contest was too early to call, according to NBC News. However, that didn't stop ex-Mayor Pete Buttigieg from claiming victory. The next nominating contest is a week from Tuesday: the New Hampshire primary.

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2020-02-04 12:59:00Z
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Tesla is jumping yet again, soaring 13% in early trading following a 19% surge on Monday - CNBC

GP: Elon Musk, chief executive officer of Tesla Inc., speaks during an event at the site of the company's manufacturing facility in Shanghai, China, on Monday, Jan. 7, 2019.

Qilai Shen | Bloomberg | Getty Images

Tesla jumped again on Tuesday, smashing past the $800 level and set to open at a new record high as major shareholder Ron Baron forecast the company will top $1 trillion in revenue in a decade and as investors who bet against the stock scrambled to catch up.

The more than 14% surge comes after Tesla on Monday climbed 19.9%, its biggest one-day gain in six years. Tesla's stock roared after Argus Research raised its price target to a new Wall Street high of $808 a share. But even Argus' price target is below where the stock is set to open on Tuesday.

Tesla shares are up more than 80% this year through Monday's close, fueled by analysts raising price targets to catch up to the stock and short-covering by investors betting against the shares. Analysts still can't keep up with the run. The average 12-month price target of analysts is $493, up from $334 in December, according to FactSet. That new target is more than 40% below where the stock is trading in premarket trading Tuesday.

At the same time, short-sellers are scrambling with investors betting against the stock down more than $8 billion since the beginning of the year, according to S3 Partners. Since Tesla's stock was under $200 a share in June, the firm said short sellers have covered $12.6 billion worth of stock. That's a factor that is likely fueling Tesla's current rally: If enough short sellers buy in tandem, it can create higher demand and itself drive the equity price even higher, a phenomenon also known as "a short squeeze."

Two years ago Tesla CEO Elon Musk promised the "short burn of the century" was coming soon, saying in a tweet that "flamethrowers should arrive just in time." Within an hour of Monday's close, Musk tweeted three flame emojis.

 

Ron Baron: Nowhere near the end

Billionaire investor Ron Baron believes Tesla will hit $1 trillion in revenue in 10 years and continue to grow from there.

Baron's investment firm holds nearly 1.63 million Tesla shares – worth more than $1 billion at current levels.

"It's nowhere near ended at that point and time," Baron said on "Squawk Box." "There's a lot of growth opportunities from that point going forward."

Baron's seemingly wild optimism has become much less outlandish after the stock's rally over the past six months. He is among a group of money managers who have given massive forecasts for Tesla before, including Ark Investment Management founder Catherine Wood. Last month, Wood told CNBC that she believes Tesla could be worth more than $6,000 per share in the next five years – upping her prediction of $4,000 a share that she made two years prior.

'Watch out Tesla believers'

But some Wall Street analysts are not so sure Tesla's gains will last, and even political activist Ralph Nader chimed in on Twitter: "Watch out Tesla believers."

"When the stock market bubble implodes, it will have been started by the surge in @Tesla shares beyond speculative zeal," Nader said.

– CNBC's John Melloy contributed to this report.

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2020-02-04 12:27:00Z
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Tesla investor Ron Baron sees $1 trillion in revenue in 10 years — and that won't be the end - CNBC

Billionaire investor Ron Baron believes Tesla will hit $1 trillion in revenue in 10 years and continue to grow from there.

"It's no where near ended at that point and time," he said Tuesday morning on "Squawk Box." "There's a lot of growth opportunities from that point going forward."

Baron, whose eponymous investment firm holds nearly 1.63 million Tesla shares, said his Baron Capital firm will not sell a single share of company, saying Tesla's recent run is "just the beginning."

Tesla's stock has climbed nearly 220% in the past six months, including roughly 86.5% this year. The company's market cap is now more than $140 billion -- nearly triple that of General Motors but below Toyota Motor at roughly $227 billion.

The stock closed up 19.9% on Monday at a record high $780 per share. Shares were up more than 6% in pre-market trading on Tuesday to about $833 per share.

Monday marked the best day for Tesla since May 2013, when the company reported its first quarterly profit and Consumer Reports gave the Model S a "near perfect" score.

Investors betting against Tesla's stock have lost more than $8 billion since the beginning of the year, according to data from S3 Partners, including nearly $2.5 billion in losses on Monday's surge alone.

In 2018, Baron first made headlines by saying Tesla could generate $1 trillion in revenue by 2030. Tesla's revenue was $21.5 billion in 2018, up from $11.8 billion a year earlier. It reported revenue last week of $24.6 billion in 2019.

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2020-02-04 12:12:00Z
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