Less than a month after Tesla's stock first rose above $400, the company's shares have now soared past $500 per share. As I write this, one share of Tesla stock is worth $516, which means the company as a whole is worth more than $93 billion.

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The latest rally was sparked by a new report from Colin Rusch, an analyst at the Wall Street firm of Oppenheimer & Co. He revised his Tesla price target upward from $385 to $612. But more fundamentally, the rising stock price reflects the fact that, after a couple years of near-constant chaos, the company seems to finally be executing smoothly.

Tesla delivered 112,000 cars in the fourth quarter of 2019 and 367,500 for the full year. Both were new records for the company; Tesla barely achieved its goal to deliver at least 360,000 cars for the year.

And the company is poised for continued growth. Tesla opened its new factory in China earlier this month, just a year after breaking ground on the facility. The electric-car maker plans to build a third major car factory in Germany.

Tesla's rising stock price has put Elon Musk within striking distance of winning the first of 12 performance-based stock grants he negotiated in his 2018 compensation package. To win an award of 1 percent of the company's stock—worth around $1 billion—Musk must pass two milestones. First, Tesla stock must be worth more than $100 billion—it's $93 billion now. Second, Tesla must hit specified targets for revenues and earnings—for example, $20 billion in annual revenue.

Tesla said in an October regulatory filing that the company has already hit this $20 billion revenue figure. That clears the way for Musk to collect his stock award if Tesla's share price rises above $553 in the coming months.

Why Wall Street Is So Bullish About Tesla

Tesla is now by far the most valuable car company in America. As I write this on Monday afternoon, Tesla's market capitalization is $93 billion, compared to $50 billion for General Motors and $37 billion for Ford. That's especially remarkable because GM sold around 20 times as many cars as Tesla in 2019, while Ford sold more than six times as many.

So what explains Tesla's astronomical stock price? You can never be sure what Wall Street is thinking, but two factors likely contribute to investor bullishness about Tesla.

One is growth. The global car market overall is pretty saturated, but many experts expect electric vehicles to be a growth market over the next decade. Governments around the world have created incentives for people to buy electric vehicles. Meanwhile, battery costs have been falling rapidly over the last decade and are expected to continue falling in the 2020s. That should mean falling electric car prices, which should expand the market for electric vehicles in the coming years.

And while most major carmakers are working on their own electric vehicles, Tesla's rivals have struggled to design vehicles that can capture the public imagination the way Tesla's cars do. The Model 3 was by far the most popular all-electric car in the United States in 2019, with substantial sales overseas as well. If Tesla can maintain its share of the electric vehicle market as the overall electric car market grows, Tesla could wind up being one of the world's leading automakers.

The other factor that could justify Tesla's high valuation is the potential for high margins.

Tesla is not an especially profitable company. But things could improve dramatically over time. Declining battery prices will improve Tesla's margins. As a young and inexperienced carmaker, Tesla may have greater room to improve the efficiency of its manufacturing.

At the same time, Tesla has something no other carmaker can match: a loyal, enthusiastic, and growing customer base.

Like Apple

I'm not the first person to compare Tesla to Apple, but I think the comparison makes sense. Apple has only 15 to 20 percent of the global smartphone market, well below Google's Android. But the distinctiveness of the iPhone platform, combined with the loyalty of the Apple customer base, means that Apple can charge a premium for the iPhone. As a result, Apple's share of smartphone industry profits is much larger than its share of unit shipments or revenue.