Tesla (NASDAQ:TSLA) stock is on a roll, and you definitely don’t want to stand in the way of this moving train (or car) because you’re liable to get run over. I am bullish on Tesla stock because the sentiment surrounding Tesla is overwhelmingly positive. Furthermore, the optimism may be justified by Tesla’s arrangements with Ford (NYSE:F) and General Motors (NYSE:GM).
Believe it or not, Tesla stock has already risen for 10 consecutive days, and today will probably make it 11 days in a row. As we’ll discover, analysts are lukewarm on TSLA stock’s future prospects. Yet, financial traders are relentlessly pushing Tesla’s share price higher.
If the trend is your friend, then Tesla stock could be your profitable pal as long as the Tesla train keeps on moving forward. If you’re not on board with this, it’s still probably not a great idea to short TSLA stock since that’s a very dangerous proposition.
Don’t Obsess Over Tesla’s Valuation
If you subscribe to the Warren Buffett philosophy of investing in undervalued businesses that pay dividends, then you might bristle at some of Tesla’s vital stats. Tesla doesn’t pay any dividends, and both crowd wisdom and blogger sentiment are bullish for TSLA stock.
Plus, value-focused investors would probably cringe if they found out that Tesla has a GAAP trailing 12-month (TTM) price-to-earnings (P/E) ratio of 69x, which is several orders of magnitude greater than the sector median P/E ratio of 16.6x. Further, Tesla’s TTM price-to-book (P/B) and price-to-sales (P/S) ratios are much higher than their respective sector median values.
Yet, every time Buffett-style investors complain that Tesla is too richly valued, financial traders find another reason to push the share price higher. For instance, even after many consecutive green days, TSLA stock still moved up yesterday because of a rumor/report that Tesla is in talks with a regional government in Spain to set up a new “gigafactory” or large electric vehicle (EV) factory there.
Clearly, the market is eager for positive news and will accept just about any excuse to buy Tesla stock in 2023. Still, there’s at least one news item that’s not just an excuse, as it points to Tesla’s value-added collaboration with a pair of old-school automotive giants.
Tesla Partners with Ford and General Motors on EV Chargers
In late May, Tesla reached an agreement with an unlikely partner — Ford. Currently and in the future, anyone who owns a Ford vehicle will have access to Tesla’s network of “superchargers” (i.e., rapid EV charging stations).
The market celebrated this bold move, and I don’t blame them. If the vehicle electrification movement is going to continue in the U.S., automakers and charging station providers will need to work together. Tesla and Ford, even though they are rivals as automakers, are leading by example with this EV-charging agreement.
Now, in a fresh update, General Motors is following Ford’s lead by establishing a similar EV charging agreement with Tesla. Reportedly, General Motors expects its EVs to be able to access Tesla’s “supercharging” network sometime next year.
There’s a bigger-picture implication here since Ford’s and General Motors’ arrangements with Tesla should make it more convenient to charge a wide variety of EVs. All in all, these agreements are a win-win for practically everyone concerned — except for anyone imprudent enough to short TSLA stock.
Is TSLA Stock a Buy, According to Analysts?
It might surprise you to discover that Wall Street’s experts aren’t massively bullish on Tesla right now, though they are somewhat positive. On TipRanks, TSLA stock comes in as a Moderate Buy based on 15 Buys, 10 Holds, and four Sell ratings. However, the average Tesla stock price target is $198.54, implying 19% downside potential.
If you’re wondering which analyst you should follow if you want to buy and sell TSLA stock, the most profitable analyst covering the stock (on a one-year timeframe) is Alexander Potter of Piper Sandler, with an average return of 115.39% per rating and a 64% success rate. Click on the image below to learn more.
Conclusion: Should You Consider Tesla Stock?
Tesla will probably continue to punish the short-sellers and reward its shareholders this year. The skeptics can point to valuations all day long, but that’s not likely to stop the fast-moving Tesla train.
So, I won’t try to stand in the way of TSLA stock’s powerful forward momentum right now. Also, I believe it’s fine to consider a long position in Tesla if you’d like since the market’s optimism appears to be justified.