Even though Tesla posted an annual loss for 2019, as it has every year, its backers argue that the company has corrected course. Operating costs were down about 7 percent last year, while automotive sales were up 13 percent and deliveries rose 50 percent. With a new Shanghai factory producing vehicles in China and another under construction in Europe, Tesla is also poised for global expansion, they say.

But the company’s sky-high valuation — which has more than tripled since late October — is about more than improved efficiency and new factories. It’s a bet on Tesla’s future.

The company has a lock on the small, but growing battery electric vehicle market — and the bulls believe Tesla’s not about to lose it. In a note over the weekend, ARK, an investment management firm, said it expected Tesla’s share price to soar to $7,000 in five years based on a belief that Tesla can increase profits, decrease costs and build a fully autonomous taxi network. Even less-exuberant analysts say the company has proved itself.

“Tesla has demonstrated that it can build cars while generating cash and with best-in-class profit margins,” said Pierre Ferragu, an analyst at New Street Research. His rating on the stock is neutral, however, with a price target of $800.

What about Tesla’s critics?

There have been several reasons to bet against Tesla’s shares.

The company seemed unable to generate enough cash from car sales to cover its costs. It was having real problems producing cars on time. Mr. Musk behaved in unorthodox ways, including making remarks that courted scrutiny from regulators and resulted in his stepping down as Tesla chairman. And according to critics, Tesla has long been overvalued, leaving the stock vulnerable if its financial results disappointed.