Executive Edge

Tesla rally won't stop at $500, recent stock trading history suggests

Key Points
  • Tesla shares hit $500 for the first time.
  • Recent history shows that the stock momentum for Elon Musk's company can continue. 
Past trends indicate Tesla shares have room to run beyond $500
Tesla shares have room to run beyond $500

Shares of Tesla hit $500 per share Monday for the first time, and trading history for Elon Musk's electric vehicle maker suggests that the stock market run can continue.

The rally began in October when Elon Musk's electric car company surprised Wall Street, turning a profit. The stock has doubled in the past three months. Tesla soared nearly 40% in the past month alone.

According to a CNBC analysis of data from hedge fund trading tool Kensho, two weeks after moves of similar magnitudes, Tesla stock tends to perform well, gaining another 2.4% on average. In these eight similar trading scenarios over the past five years, Tesla stock traded positively 88% of the time — outperforming the S&P 500.

The recent gains bring Tesla's market cap to about $90 billion, which is nearly $5 billion more than that of General Motors and Ford combined.

Several factors have contributed to Tesla's run: the company's entrance into China and fourth-quarter delivery numbers published earlier this month that investors read as bullish. On Monday, Oppenheimer pushed Wall Street bullishness on Tesla to a new level, raising its price target to over $600, up from $385.

Tesla co-founder and CEO Elon Musk gestures while introducing the newly unveiled all-electric battery-powered Tesla Cybertruck at Tesla Design Center in Hawthorne, California on November 21, 2019.
FREDERIC J. BROWN | AFP | Getty Images

"We believe the company's risk tolerance, ability to implement learnings from past errors, and larger ambition than peers are beginning to pose an existential threat to transportation companies that are unable or unwilling to innovate at a faster pace," Oppenheimer analyst Colin Rusch said in a note to clients.

Tesla CEO Musk teased some new features for its vehicles over the weekend, including a talking car.