Tesla Motors Inc (NASDAQ:TSLA) stock is just unstoppable. After climbing more than 70% in just two months, the momentum in Tesla stock kept going. Even the recall of Tesla’s 2,700 “Model X” sport utility vehicles did not affect investors’ enthusiasm that much.
Is TSLA Stock a Safe Bet Right Now?
Usually, after a giant surge, we see some pullback in stocks. But that’s not the case here. The huge increase in Tesla’s stock price was mostly due to its “Model 3” unveiling event at the end of March. Markets certainly had high hopes for Tesla’s first mass market electric vehicle (EV).
The best part is that the Model 3 unveiling turned out to be great. The event not only showed the impressive specs of the car, but it also brought in a ton of preorders. On April 7, company founder and CEO Elon Musk tweeted that preorders of the Model 3 had surpassed 325,000, which could bring in approximately $14.0 billion in sales for Tesla in the future. (Source: “Elon Musk’s Tweet,” Twitter, April 7, 2016.)
Of course, production of the Model 3 won’t begin until late 2017, and there are still concerns about whether Tesla will have enough production capacity to fulfill those preorders. Is there anything that could propel Tesla stock in the near term?
As it turns out, there is one. And it’s already in Tesla’s showroom.
I’m talking about the “Model S”—the vehicle that brought Tesla from a niche EV maker to a $33.0-billion company.
You might think that the Model S is old news. Sure, it is entering its fourth year of production. But sales are still going strong, and Tesla just gave it a major update.
In the automotive industry, companies don’t give complete redesigns to their cars every year. Instead, they introduce one or two “facelifts” during the model cycle. This time around, it’s Tesla’s turn.
The company confirmed the details of a Model S refresh after several pictures of it leaked online. The first change you’ll notice is the front end, which now looks very similar to the Model X SUV. The update also adds a new set of LED adaptive headlamps, which can improve visibility on winding roads at night. (Source: “Tesla Model S Finally Gets a Facelift,” Autoblog, April 12, 2016.)
The Model S is also getting the HEP air filtration system, which includes a “Bioweapon Defense Mode.” According to Tesla, the system “removes at least 9.97% of particulate exhaust pollution and effectively all allergens, bacteria and other contaminants from cabin air.” (Source: “Model S,” Tesla Motors Inc, last accessed April 13, 2016.)
Tesla also updated the standard charger for the Model S from 40 amps to 48 amps. This means the Model S will be able to recharge faster than before.
Note that while updating brand new cars, Tesla did not forget existing Model S owners. The company recently introduced a retrofit of “Ludicrous Mode” to all “P90D” sedans. In the past, you had to tick that option when you first bought your P90D to have that feature. (Source: “Ludicrous Mode P90D,” Tesla Motors Inc, last accessed March 24, 2016.)
For P90D owners who didn’t have that option before, the retrofit gives a solid boost to their car’s performance. In Ludicrous Mode, the car is capable of accelerating from zero to 60 mph in just 2.8 seconds. That’s super-car territory!
For Tesla, retrofitting Ludicrous Mode will bring in some decent revenue. The retrofit option has a price tag of $10,000, and that’s before taxes and labor.
The Bottom Line on TSLA Stock
To see how strong the momentum is in Tesla Model S, here are some numbers: In the first quarter of this year, the company delivered 12,420 Model S orders, a 24% increase year-over-year. Moreover, orders for the Model S came in 45% higher year-over-year. (Source: “Tesla Delivers 14,820 Vehicles in Q1 2016; On Track for Full-Year Delivery Guidance,” Tesla Motors Inc, April 4, 2016.)
Needless to say, Tesla still has a lot of work ahead. But with Model S sales still going strong, TSLA stock might be more solid than you think.