Tesla Motors Inc. (Nasdaq: TSLA) stock reached its all-time high yesterday (Tuesday) of $202.20 shortly after the market opened. That was after setting another record high on Monday of $196.
TSLA stock has been on fire this year, up nearly 31% in 2014. More impressive, that rally has occurred during a market sell-off that's seen the Dow Jones Industrial Average and the S&P 500 dip 3.6% and 1.5% respectively.
In the past 12 months TSLA stock is up an incredible 418%.
Here's why TSLA looks so strong.
What's Behind Tesla's (Nasdaq: TSLA) Record Highs
Tesla's sales were through the roof in the fourth quarter. The company reported selling 6,900 of its Model S, which topped its fourth-quarter guidance by 20%. It was also a 25% increase from the previous quarter.
Another factor fueling the stock is China's push to increase electric car sales. In 2013, electric car buyers in China were paid a subsidy between 35,000 yuan and 60,000 yuan per vehicle. That's approximately $5,780 to $9,900.
Consumers were expecting China's Finance Ministry to cut those subsidies by 10% in 2014 and 20% in 2015. The ministry announced this week however that subsidies would only be cut 5% in 2014 and 10% in 2015.
Currently, Tesla's Model S does not qualify for that assistance, but the company is pushing hard to be included.
"We understand we don't qualify for direct subsidies," Tesla's Vice President of Business Development Diarmuid O'Connell told Bloomberg. "We're hoping the government will consider the role Tesla can have in catalyzing electric vehicle adoption in China and extend those incentives to Model S as well."
China is the world's largest auto sales market, and Tesla hasn't begun selling its vehicles there yet. Tesla Chief Executive Officer Elon Musk has stated that his company will begin selling its Model S in China in March.
In 2013, 19.3 million vehicles were sold in China, but only 11,375 were electric vehicles. That percentage is low, but the subsidies should push that number higher. As electric vehicles grow in popularity in China, so too will Tesla, even if it doesn't qualify for subsidies at the moment.
Tesla is optimistic about its foreign growth and has stated that if demand is as high in Europe and Asia as it has been in the United States, global sales of the Model S could reach 40,000 in 2014.
Can Tesla (Nasdaq: TSLA) Continue Its Historic Run?
Tesla will report its fourth-quarter earnings on Feb. 19, and investors will be looking closely for 2014 guidance figures. Company officials have remained optimistic, but have only hinted at what they expect.
"What's in store for 2014? It's growth, growth and growth," Tesla's Vice President of Sales and Service Jerome Guillen said in January. "On the sales and service side, it's reckless growth."
Investors will also be looking for updates on the company's Model X crossover SUV, which is expected to go on sale by the end of 2014. Many expected an unveiling of the vehicle at the 2014 Detroit auto show, but the company did not oblige.
Currently, the company only sells the Model S. Adding additional models to its portfolio will only help sales.
TSLA stock is by no means cheap at around $195, but it is rated favorably by analysts. According to Thomson/First Call, four analysts rate TSLA as a "strong buy," four as a "buy," five as a "hold," and only one as an "underperform." Currently, no analysts rate it as a "sell."
If Tesla posts strong guidance figures in its earnings report next week, investors should expect more peak highs for TSLA stock.
Do you think TSLA stock will continue its torrid pace or is it due to slow down? Let us know on Twitter @moneymorning using #Tesla.
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