Move over, naysayers.
The stock is now trading just over $269, about 7% lower than its all-time high. When Tesla reports earnings on Feb. 22, investors will be interested in knowing what it will take for Tesla to climb to a new high. Tesla shares were roughly flat in late Friday trading.
If Musk addresses two things, prepare for the stock to make a stellar run that will last well beyond the company's earnings report. Tesla's massive charging infrastructure has already helped it vault into the lead as the dominant electric vehicle firm. The only real rival to its Model S sedan and Model X SUV is General Motors' (GM - Get Report) Chevrolet Bolt, essentially a small car.
But Tesla, which has not had a profitable year since its IPO, is seeing some competition in another key area: autonomous vehicle technology.
A Tesla dealership
Tesla started testing self-driving cars in California late last year, but it's not alone. Volkswagen, Mercedes Benz, Alphabet (GOOGL - Get Report) , Delphi Automotive (DLPH - Get Report) , Bosch, Nissan, General Motors, BMW, Honda, Ford (F - Get Report) , Faraday & Future and Baidu (BIDU - Get Report) are all planning on introducing the functionality into their products.
Tesla's lack of profitability has not disappointed investors much. Over the past year, Tesla shares have risen nearly 80%. But intense competition could be a problem.
To ensure that his company maintains its momentum, Musk needs to stick to his timeline of releasing the Model 3 in mid-2017. There have been encouraging signs, including the launch of a pilot Model 3 test-building program on Feb. 20.
The $35,000 Model 3 could fill a gap, providing Tesla with a killer, mass-market car.
To be sure, many analysts and suppliers have pointed to Tesla's history of missing aggressive production targets. That's why staying on schedule for a July 2017 production launch would give the stock a huge boost.
If suppliers and Tesla are able to work together effectively, Musk might be able to fulfill his promise of producing 500,000 cars per year by 2018. This would mean Tesla's annual production would expand by roughly five times compared to 2016 levels.
Tesla usually gives a fair idea of the year ahead when releasing fourth quarter earnings. Based on previous year-end earnings reports, and given the uncertainties surrounding the Model 3, a 50% growth rate or higher would be outstanding and could trigger a strong uptick in the stock.
If the production ramp-up goes particularly well, some experts think Tesla could deliver as many as 200,000 vehicles in 2017.
Meeting targets on time would solidify Tesla's brand as a high-volume automotive company.
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