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Tesla stock is soaring, up more than $23, or 6.5%, in Monday trading. That’s a fresh 52-week high for the electric-vehicle pioneer. The problem is no one on Wall Street exactly knows why shares are rising.
One automotive analyst told Barron’s the Tesla (ticker: TSLA) move was “surprising,” noting that U.S. federal EV tax credits are set to decline in 2020. And a Wall Street trader didn’t have any extra insight when asked about Monday’s move.
Deutsche Bank analyst Emmanuel Rosner noted in a Monday research report that a German news outlet reported a new Tesla facility in that country was granted approval. Good news, but it isn’t a stock-moving event. No one expected Tesla to have a problem building capacity in Germany. The company is expanding its manufacturing footprint beyond its Fremont, California origins to Shanghai as well as Europe.
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Rosner rates shares the equivalent of Hold and has a $290 price target for the stock.
Of course, Tesla is a heavily-shorted stock. Bearish investor borrow shares and sell them, betting on price declines. And relatively high levels of short selling can create more stock volatility. There is always the potential for a “short squeeze,” too when investors rush to cover short positions all at once, creating a temporary flood of buy orders.
Even if investors can’t agree on the why, they can agree on the impact. The rally in Tesla share has been breathtaking. Closing at Monday’s prices would be highest close since August 7, 2018, when shares closed at $379.57, according to Dow Jones Market Data. What’s more, shares are up more than 110% from their 52-week closing low of $178.97 on June 3, 2019. It has been a remarkable run.
Tesla shares are now up about 14% year to date, a little worse than comparable gains of the S&P 500 and Dow Jones Industrial Average. But Tesla stock is up almost 57% over the past three months.
Better-than-expected third-quarter numbers catalyzed the stock’s recent rally.
Write to Al Root at allen.root@dowjones.com