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Finance November 14, 2024

Tesla's Hot Streak Continues: Stock Hits New High

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On a remarkable Wednesday, the shares of Tesla, Inc(TSLA) danced like a gleaming star across the canvas of the financial markets, achieving an astounding intraday highInvestors watched with anticipation as the stock demonstrated a steady ascent for the sixth consecutive trading day, with hopes of reaching a monumental closing record that would etch yet another vivid chapter in Tesla’s storied history.
During the day’s trading session, Tesla’s stock soared like a rocket, peaking at a dazzling $424.88. This figure surpassed the previous intraday high of $414.50 set back on November 4, 2021, marking a new milestone in the company’s financial journeyAdditionally, Tesla’s earlier closing record from that historic date stood at $409.97, establishing a benchmark that clearly defines its market trajectory.
A significant factor contributing to this surge was the release of November's inflation data, showing a year-on-year price increase of 2.7%. Such data can carry profound implications for the global financial landscape, as it enhances the probability of the Federal Reserve maintaining its course in interest rate cuts during the upcoming week

This dovish stance by the Fed often spurs positive momentum in equity markets, creating a favorable macroeconomic environment for various stocks, which Tesla has undoubtedly benefitted from.

As of this pivotal moment, Tesla's stock has exhibited approximately a 67% increase in value for the year, distinguishing itself in the competitive arena of the stock marketParticularly since November, when it has surged about 65%, this impressive momentum has catapulted Tesla's price to the brink of its all-time highThe stock's remarkable performance has not only drawn the attention of eager investors but also sparked extensive discourse across the market.

The optimism surrounding Tesla does not solely hinge on financial metrics; recent speculation about the relationship between CEO Elon Musk and newly elected President Donald Trump has further elevated market sentiment, propelling the stock’s increase

The continuous rise has encouraged analysts to revise their target prices, which contributes to forming a virtuous cycle.

This positive feedback loop manifested once again on Wednesday, as Goldman Sachs analyst Mark Delaney raised Tesla's target price from $250 to $345, despite lowering the company’s earnings expectations due to anticipated slowdowns in electric vehicle growthHe underscored that investors are increasingly focused on Tesla's artificial intelligence (AI) initiatives, with the company training its vehicles for autonomous driving and planning to launch its self-driving taxi service by the end of 2025.

Delaney has maintained a “hold” rating on Tesla, with a target well below the current market priceIn fact, Tesla’s stock price has significantly surpassed analysts' average target prices, which, according to FactSet, stands at around $271, suggesting that Tesla’s stock is over 50% higher than the consensus among analysts.

While concerns might arise from the stock trading above target prices, this phenomenon is not unusual for Tesla

Historically, the company’s shares have spent half of the past five years trading above analysts’ average predictions, in contrast to Apple’s stock, which only exceeded that threshold about 15% of the time during the same period.

There have been moments in history when the discrepancy between analysts and the market has been even more pronounced, particularly in 2020 when Tesla’s stock skyrocketed over 740%, leaving Wall Street scrambling to catch upAs of now, Stifel Nicolaus’s analyst Stephen Gengaro is the only one from a major U.Sbrokerage to provide a target exceeding $400, specifically assigning a price target of $411 and rating for Tesla as “buy.”

If Tesla continues on its upward trajectory, it is likely that more analysts will adjust their price targets beyond $400. The robust performance of Tesla’s stock signifies a growing confidence in the company’s prospects, particularly concerning advancements in autonomous driving and AI technology

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