Tesla’s turnaround gains steam as stock closes above $400.
Possible Model 3 price cut credited for some gains
Tesla shares on Thursday surpassed the $ 400 mark for the first time ever, putting a proverbial exclamation point on what could be called a turnaround year for the electric carmaker, and its Chief Executive, Elon Musk.
Tesla’s shares rose 2.8%, to close Thursday at $ 404.04, giving the stock a boost of more than 21% for the year. Some of the credit for Tesla’s latest gains was pinned on a Wednesday report that the company is considering cutting the price of the Model 3 cars it makes at its Gigafactory in China by at least 20% next year in an effort to spur sales in what is seen as one of Tesla’s most-important markets outside of the U. S.
“We believe 2020 is a pivotal year for Tesla to double down on China with Gigafactory 3 and demand ramping,” said Dan Ives, managing director at Wedbush Securities. “Musk should get a ton of credit. Wall Street is showing optimism about Europe demand and China front and center and if ( Tesla is) successful, the stock likely goes much higher.”
And Tesla’s latest share gains edged its stock price closer to the $ 420 mark. That price has a special place in Tesla’s history, because it was the per- share amount
Musk used when he announced plans to take Tesla private in August 2018. That tweet, which also included Musk saying he had “funding secured” to take Tesla private, started off several months of controversy over Musk’s role as Tesla CEO, and which colored the company’s performance throughout the rest of last year, and a cast shadows over Tesla, and Musk, as 2019 began.
Less than two weeks after Musk said he wanted to take Tesla private, Musk gave an emotional interview with the New York Times that left many questioning his mental state, and sent investors into sell mode with their Tesla stock. Not long after that interview Musk changed his mind and said Tesla would remain a public company. Musk followed that decision up with an appearance on the Joe Rogan Experience podcast where he smoked what was said to be a marijuana-laced cigarette.
But, there was more to come.
Cave diver Vernon Unsworth sued Musk for libel and slander over Musk calling Unsworth “pedo guy” on Twitter. ( In early December, a jury in Los Angeles determined that Musk’s comments didn’t defame Unsworth.) In September 2018, the U. S. Securities and Exchange Commission sued Musk for fraud over his tweets about taking Tesla private and sought to remove him from his CEO Job. Two days later, Musk settled the case, as he agreed to step down as Tesla’s board chairman for at least three years, and he and Tesla each paid the SEC a fine of $20 million.
By the end of 2018, Tesla’s shares had fallen to $332.80, or more than 12% less than the stock’s closing price on the day Musk tweeted his plan to take Tesla private.
After all of that, there were many concerns about where Tesla would go in 2019. But, instead of falling apart, Musk and Tesla put together what was arguably one of the most- successful, and calmest years in the company’s history.
In January, Tesla broke ground on its Gigafactory in Shanghai, with Musk touting that the plant would eventually be capable of producing 500,000 cars a year. By November, the first Model 3 cars built at Tesla’s Chinese factory began rolling off the assembly line, and by December, Wall Street analysts were saying Tesla was already benefiting from the work at the facility.
In March, Musk showed off Tesla’s Model Y crossover SUV, with an introductory price tag of $ 39,000. Musk said the first Model Y vehicles will be delivered in late 2020. At the time of its debut, Maynard Um, an analyst with Macquarie Research, said the Model Y “may be the most important vehicle in Tesla’s history.”
Tesla said in October that during the third quarter of this year, it delivered a record 97,000 vehicles. While that number fell short of the 99,000 deliveries expected by many industry analysts, Tesla said it was on track to deliver at least 360,000 cars for all of 2019.
“All signs point to the automaker posting a record quarter in the fourth quarter, as the company has been producing and delivering vehicles at a high rate, which should bode well for 2020,” said Jesse Cohen, an analyst with financial markets platform Investing.com.
Then there was the Cybertruck.
Musk showed off the Blade Runner- esque looking vehicle at an event in late November and it immediately became the talk of the automotive world, and on social media. Not even a botched demonstration that shattered two of the Cybertruck’s windows could cool enthusiasm over the vehicle, as Musk tweeted that Tesla had received 250,000 orders for the Cybertruck within a week of its debut, even though the first Cybetrucks aren’t scheduled to be delivered until late 2021, at the earliest.
And within weeks, sightings of the Cybertruck “in the wild” on the streets around Los Angeles became a type of sporting event.
“It’s been quite the turnaround for Musk since his ‘ funding secured’ tweet debacle of last year,” Cohen said. “Tesla’s stock has been one of the top performers of the second- half of the year and Musk is proof that you can take on the SEC, smoke weed on podcasts, call people pedo guy and still run a $70 billion company.”