Tesla Motors Inc. (Nasdaq: TSLA) stock rebounded from March losses today when it reached a two-week high of $235.73 in early trading. The stock has since pared its gains, but is trading up almost 9% on the week.
Tesla had been one of the hottest stocks of the past year, posting a gain of 637% from the start of 2013 through February 2014.
But those gains came to a screeching halt last month, and from March 4 through March 31, TSLA stock dropped almost 17%.
Here's a closer look at what's behind this volatile movement for Tesla stock...
One of the reasons behind TSLA stock's March drop was the flurry of legislative news that broke during the month.
On March 11, the New Jersey Motor Vehicle Commission ruled that Tesla would no longer be allowed to sell its vehicles directly to consumers. New Jersey requires automakers to sell their vehicles through franchised dealerships, but Tesla had received licenses allowing direct sales at two New Jersey locations. On March 11, the state passed a new regulation revoking Tesla's right to sell directly to customers.
At the same time, similar legislation was being discussed in New York and Ohio, and it was looking like Tesla's business model would be outlawed in an increasing number of states.
But yesterday, news broke that Tesla would be appealing that legislation in New Jersey in an attempt to bring direct sales back to one of the U.S.'s largest luxury vehicle markets.
That news helped send Tesla shares up more than 6% yesterday alone.
The last week has also seen positive headlines out of New York and Ohio, where Tesla has reached compromises with both of those states to continue direct sales.
But it wasn't just news stateside that sent TSLA stock higher this week...
Tesla reported this week that it doubled its typical sales in Norway in March to 1,493 vehicles. That total made it the No. 1 electronic vehicle maker in the country. Almost three times as many Model S sedans were sold in March as the second-place Nissan Leaf.
Tesla's total of 1,500 vehicle sales in Norway doesn't sound particularly astonishing at first - until it's viewed with Tesla's foreign sales goal in mind...
Earlier this year, Chief Executive Officer Elon Musk announced that European and Asian sales of Tesla are expected to outpace sales in North America. Overall, the company anticipated a 55% jump in global sales for 2014. The fact that Tesla is dominating the electric-vehicle market in any European country, even one with a small population like Norway, is good news for investors.
Now that Tesla has hit a two-week high, here's the best play for investors...
Taking into account March's pullback and this week's rally, TSLA stock has gained 50% year to date and 438% in the last 12 months.
According to a recent poll by Thomson/First Call, three analysts rate TSLA as a "Strong Buy," three as a "Buy," six as a "Hold," one as an "Underperform," and none as a "Sell." Zacks Investment Research places a "#1 Strong Buy" rating on Tesla, and it's the only U.S. automaker with that ranking from the firm.
TSLA shares are trading down from an all-time high of $265 per share, but it is still expensive at more than $230 per share. Investors are justified in being wary of buying in at that price, but the potential for Tesla's long-term performance is undeniable.
For investors looking to buy into the electric vehicle market, or who are looking for an innovative market leader in a burgeoning market, TSLA is a strong choice.
Do you own Tesla stock? Are you thinking of buying in on TSLA after March's pullback? Let us know on Twitter @moneymorning using #Tesla.
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