The incredible run-up in Tesla (NASDAQ:TSLA) shares shows no signs of slowing. The company split its shares to increase liquidity and lift its
affordability. Still, the share price kept rising.
In the next few weeks, Tesla’s stock should continue rising as investors bet on index fund purchases sending shares higher. After that, a dip is possible but may not last. Ever since it launched the affordable Model 3, shareholders studied its unit sales growth. And although the Model Y is plagued with quality issues, the recalls and fixes are not enough to detract shareholders from selling.
Tesla’s Gigafactory installation in China cut production costs. The mass-production strategy will enable Tesla to grow sales worldwide. At a lower cost basis, the company will start posting big enough profit margins to justify the stock’s valuation.
Markets jumped ahead of this expectation and are paying a premium. Still, Tesla’s steady expansion strategy is steady. Nio and XPeng are behind. They may have nicer vehicle designs and advanced self-driving solutions. But their growth is limited to demand in China. Investors should hold shares in either company should treat them as trades. If the stock dips by too much, sell them to book profits.