Why Tesla Stock Rallied Today

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What happened

Shares of Tesla (NASDAQ:TSLA) rose on Monday after CEO Elon Musk said the electric vehicle (EV) maker’s Model S Plaid luxury sedan is likely to make its debut in China in March. 

By the close of trading, Tesla’s stock price was up 1.7%, after rising as much as 5.7% earlier in the day. 

So what

“Model S Plaid is sickkkk!!!!,” Musk said on Twitter early Monday morning. That led to a question asking when the new luxury vehicle would arrive in China. Musk replied, “Probably around March.” 

The Tesla Model S Plaid. Image source: Tesla.

Tesla bills the Model S Plaid as the “highest-performing sedan ever built,” with the “longest range and quickest acceleration of any electric vehicle in production.” With over 1,000 horsepower at peak power, it can go from zero to 60 miles per hour in just under two seconds and reach speeds of up to 200 miles per hour.

The Model S Plaid, however, also comes with a hefty price tag starting at $124,490. 

Now what

Still, the Model S Plaid could provide a boost to Tesla’s sales in China, which is seen as a massive growth market for the EV maker.

On Friday, Wedbush analyst Daniel Ives boosted his price forecast for Tesla’s stock from $1,100 per share to $1,400. Ives sees Tesla’s expansion in China as key to its long-term success in a global EV hardware and software market that could approach a staggering $5 trillion over the next decade.

Incredibly, Ives estimates that Tesla could capture as much as half of this potentially colossal market. That leaves plenty of room for continued growth for the EV leader.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.