Tesla Had A Monster Day

Tesla closed up 16.5% at $US144.68 today.

The stock was buoyed on news that the German Federal Motor Transport Authority cleared the Model S.

The German regulator had reviewed the Model S fire incidents in Seattle, Tennessee, and Mexico. It said “according to the documents, no manufacturer-related defects [herstellerseitiger Mangel] could be found. Therefore, no further measures under the German Product Safety Act.”

The stock also got a nice boost after Morgan Stanley calledTesla as its top pick among 26 automakers in its U.S. coverage. Jonas also said the stock is now nearly 20% undervalued.

“Tesla shares have moved from 20% overvalued to nearly 20% undervalued in just 2 months. We attribute the majority of the 35% retrenchment in the share price to a momentum/cult stock that produced 3Q results not strong enough to move expectations significantly higher. For a 5-bagger, that’s a problem. With little or no valuation support on near-term expectations, the stock was due for a big correction. We attribute less than half of the price move to negative headlines on the 3 Model S fires since October 1st.”

While Jonas isn’t calling a bottom he thinks this a good time for buyers to step in.

The stock had taken a beating earlier this year after a series of fires caused by accidents, which prompted Elon Musk to take to the Tesla Motors Blog to defend the Model S. The stock also took a hit after it missed analyst estimates on vehicle deliveries in its Q3 earnings report.

Tesla shares hit an all-time closing high of $US193.37 on September 30. The stock is down 28% from its closing high, but is up over 305% year-to-date.

Here’s a look at Tesla’s five-day chart:

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.