Tesla Motors Inc: New Report Is Big Win for Tesla Stock (TSLA)

Tesla StockTesla Stock (TSLA) Gets High Marks from Customers

A few years ago, Tesla Motors Inc (NASDAQ:TSLA) did something no other car company has ever done—it scored 103 out of 100 on the Consumer Reports rating system. This year’s rating wasn’t quite as impressive, but it still showed that Tesla’s vehicles are among the best-loved on the market. It should go without saying that this is a positive sign for Tesla stock (TSLA).

The “Model S”—Tesla’s luxury sedan and marquee vehicle—took the top spot on the rankings, coming in at a 94% satisfaction rating. The “Model X” was close behind, at 88%. (Source: “Car Brands Ranked by Owner Satisfaction,” Consumer Reports, December 22, 2016.)

Better still, 91% of Tesla owners say they would buy their cars again, which is an unusually high approval rating. The second-best rated carmaker, Porsche, only scored 84% in the “Buy again” category, and the industry average trailed in the distant 70%+ range.

The accolades were especially meaningful because Tesla has a rocky relationship with Consumer Reports. Despite the Model S shattering all expectations on its rating system, the magazine refused to recommend the Model S for “reliability.” It became a sore point with Tesla.

Elon Musk fired back at the time, saying that the “Consumer Reports reliability survey [included] a lot of early production cars” and that Tesla had already made the necessary adjustments for its newer models. He also pointed out that 97% of Tesla owners were willing to buy another one, meaning they weren’t bothered by supposed “reliability” issues.

Nonetheless, the criticism helped feed the narrative that electric cars are a gamble. On some level, that is why TSLA stock stagnated during the last year. The share price actually dropped by 10.55% from the start of 2016, but a turnaround appears imminent.

For one thing, Consumer Reports withdrew its “reliability” concerns in October. But more to the point, Tesla is making profits now. The company has successfully acquired SolarCity Corp (NASDAQ:SCTY), unveiled its mass production “Model 3,” and moved its bottom line into the black.

All of these accomplishments took place in the last 12 months. However, investors were jarred by the sheer ambition of these moves, so they reacted with conservatism. This is why the six-month chart for TSLA stock looks so volatile. The price moved up and down and up again until it ended in virtually the same position. By contrast, Tesla stock gained 13.35% in the last month.

This is a clear sign that we’ve moved past the inflection point for TSLA stock. There is significant upward pressure left to propel the share price, which we believe will play out over the next few months. Given the tenuous history between Tesla and Consumer Reports, it seems only fitting that this year’s ratings should accelerate TSLA stock’s recovery in 2017.