The leveraged ETF TSLL, which tracks Tesla (TSLA) shares on a 2x daily basis, rallied 5.15% in pre-market trading on Monday. This surge comes on the heels of Tesla's stock soaring over 12% last week amid growing optimism surrounding the electric vehicle maker's future prospects.
The key factors driving Tesla's stock rally include:
1. Bullish analyst outlook: Deutsche Bank named Tesla as one of its "key ideas for 2025," citing the company's leadership in autonomous driving technology and ability to withstand industry headwinds. The bank raised its price target on Tesla to $370, up from $295 previously.
2. Anticipated new models: Tesla revealed plans to introduce a new affordable model called "Model Q" in the first half of 2025, with a post-subsidy price below $30,000. This budget-friendly offering is expected to expand Tesla's total market opportunity significantly.
3. Robotaxi and AI ambitions: Analysts are bullish on Tesla's progress with its Full Self-Driving (FSD) software and plans to deploy a robotaxi service. Additionally, the company aims to manufacture 2 million vehicles annually by 2026 and deploy a large number of its Optimus humanoid robots, further boosting its growth prospects.
4. China sales rebound: Tesla reported record sales in China for November, selling 73,490 vehicles domestically, up 12.19% year-over-year. The strong performance in the world's largest auto market alleviated concerns over demand and positioned the company for continued growth in 2025.
While Tesla's valuation remains elevated, with shares trading at 112 times forward earnings, investors are betting on the company's ability to capitalize on its technological advancements and new product offerings. As a leveraged ETF, TSLL magnifies the daily movements of Tesla's stock, leading to its sharp surge on Monday.
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