Tesla’s 70% Rally Faces Key Test With Musk’s Latest Master Plan

The stock market’s resurgent enthusiasm for Tesla Inc. is poised for a test Wednesday when Elon Musk unveils his latest and much-hyped “master plan” for the electric-vehicle maker.

Expectations have been rising steadily ahead of the event, with several Wall Street analysts turning more bullish on the stock, taking the share of buy recommendations on Tesla to the highest in over a decade. Yet after a 70% surge in just two months, any further gains may require more fireworks than what the company’s chief executive officer is expected to deliver.

“Given the year-to-date run-up for the stock, we believe the bar has been raised into investor day — potentially setting the event up for a ‘sell the news’ reaction,” Barclays analyst Dan Levy wrote in a note on Monday. However, Levy, who has the equivalent of a buy rating on the stock, expects the event to “reinforce the long term opportunity ahead on Tesla.”

Tesla shares have taken investors on a dizzying ride over the past 18 months. Last year, they tumbled sharply as rising interest rates hammered growth stocks, slashing the company’s once more-than $1 trillion market capitalization to less than $350 billion by early January.

Since then, however, the stock has staged a major turnaround amid a rebound in investors’ appetite for growth stocks and signs that demand for Tesla’s cars is improving. That view gained support from the EV maker’s better-than-expected fourth-quarter results and a move by President Joe Biden’s administration to expand EV tax credits. Tesla is now approaching the market capitalization of Berkshire Hathaway Inc., and if it passes that would make it the fifth most valuable company in the US.

All of those factors bolstered analysts’ optimism for the stock. Out of the 48 analysts covering Tesla, 30 now recommend buying it, the biggest share since October 2012.