Why Tesla Stock Is Moving Closer To The $1,000 Level

Tesla Stock Rallies After Huge Order From Hertz

Shares of Tesla gained strong upside momentum and moved closer to the psychologically important $1,000 level after a Bloomberg report indicated that Hertz ordered as much as 100,000 vehicles from Tesla.

According to the report, Hertz’ order should bring an additional $4.2 billion of revenue for Tesla, which means that the car rental company is buying cars without a material discount which is typical for such deals.

For Hertz, the deal is a way to start the electrification of its fleet after the recent bankruptcy. For Tesla, the deal is the confirmation of its leadership in the EV space, as Hertz chose Tesla over its competitors due to the company’s ability to rapidly produce EVs. According to the Bloomberg report, the vehicles will be delivered over the next 14 months.

What’s Next For Tesla Stock?

Tesla managed to get above the $900 level after the solid quarterly report, and Hertz’ order may push the company’s shares to the $1,000 level.

Analyst estimates for Tesla’s earnings have improved in recent days, which is not surprising after the good quarterly report. Currently, analysts expect that Tesla will report earnings of $5.86 per share in 2021 and $7.77 per share in 2022, so the stock is trading at roughly 124 forward P/E.

Estimates will have to be adjusted again after the deal with Hertz, which is bullish for the stock. While Tesla’s remains a richly valued company, the robust improvement in earnings estimates in recent months provided significant support to the stock as traders ignored valuation concerns and bet on fast growth.

As long as Tesla manages to keep its growth story intact, traders will continue to ignore the company’s high valuation. It should be noted that Tesla’s RSI is in the extremely overbought territory so the risks of a pullback are high, but the stock may gain additional upside momentum as the $1,000 target is near and speculative traders rush to join the rapid move.

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