Investor's Corner

Tesla (TSLA) shares surge across 52-week high as Model 3 production takes stage

Shares of Tesla, Inc. [Nasdaq: TSLA] continue to surge, crossing its 52-week high as it nears $300 per share, amid excitement over the upcoming Model 3 pilot production and overall positive analyst outlook for the company.

Tesla’s upcoming February 22 earnings call is interconnected with the company’s plan to put its Fremont, California plant on shut down to reconfigure operations for the Model 3. With much speculation as to whether Tesla can bring the Model 3 to market in line with its target dates, comments such as those of Oppenheimer analyst Colin Rusch, who said on Monday that shares “are trading in line with anticipation of a successful Model 3 launch,” bode well for the company’s continued high levels of stock performance.

The Model 3 entree to the market has been occasionally fraught with angst over whether Tesla can meet its production goals and keep to its current level of funding. In August, Tesla had issued a SEC filing that indicated it would need to raise capital but by October had rescinded that decision. Rusch added that his group leans toward the likelihood that Tesla will “opportunistically raise capital to support medium- and long-term growth. We would view a capital raise as a catalyst to the upside given that it would remove part of the near-term bear argument.” Both Oppenheimer and Levy have a “hold” rating on the company.

To alleviate fiscal health concerns, Tesla invited a group of investors and analysts to tour its Nevada Gigafactory last month to offer face-to-face reinforcement of its capacity and commitment to produce the essential lithium ion batteries for Tesla vehicles. In the month prior to that Gigafactory event, Tesla had revealed in a regulatory filing that it increased its borrowing capacity by approximately $500 million under two credit agreements.

Baird analyst Ben Kallo cited the January Gigafactory tour as a positive force in Tesla projections and recommended to investors in a February 9 note that they buy the stock ahead of its fourth-quarter earnings release on February 22. Kallo indicated that he has confidence that Tesla can deliver about 25,000 Model 3 sedans before 2017 ends.

With all signs that the Model 3 has every chance of progressing according to plan, investors are offering Tesla a thumbs-up. The stock is up over 100-points from early December, when it traded at $181 per share, and currently trading at $286 per share.

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