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Why Tesla Shares Skyrocketed

Monday - 4/1/2013, 12:59pm  ET

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tesla Motors were revving up today, gaining as much as 23% as the electric-car maker predicted it would post its first-ever quarterly profit this May.

So what: Tesla said first-quarter sales of the new Model S sedans are coming in better than expected, topping 4,750 units, ahead of guidance at just 4,500. Tesla shares reached a new all-time high on the news as the company also announced that it would no longer produce a cheaper, lower-range version of the Model S due to low demand. CEO Elon Musk also alluded to a big announcement coming tomorrow, saying he would "put my money where my mouth is in a major way." Some speculate that the announcement could be related to quicker repayment of government loans or putting solar panels on cars.

Now what: With a backlog of 15,000 vehicles and its first profit in the pipeline, Tesla may be well on its way to disproving the naysayers. Its high-performance electric cars have elicited glowing reviews, but the stock is still pricey from a valuation perspective. Tesla did not provide more specific guidance so we don't know how much of a profit to expect, but the pieces seem to be falling into place to make this a long-term winner.

Near-faultless execution has led Tesla Motors to the brink of success, but the road ahead remains a hard one. Despite progress, a looming question remains: Will Tesla be able to fend off its big-name competitors? The Motley Fool answers this question and more in our most in-depth Tesla research available for smart investors like you. Thousands have already claimed their own premium ticker coverage, and you can gain instant access to your own by clicking here now.

This article was originally published as Why Tesla Shares Skyrocketedon Fool.com

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