Tesla hit a new high Monday morning after receiving another price-target hike from Wall Street.
Continue Reading Below
Shares crossed the $500 level for the first time, putting further pressure on short-sellers, after the New York-based investment bank Oppenheimer raised its price target to $612 a share, the highest among Wall Street banks.
“While TSLA has stumbled through growing pains, we believe the company has reached critical scale sufficient to support sustainable positive free cash flow,” analyst Colin Rusch wrote in a note sent to clients Monday. He maintained an “outperform” rating.
Rusch believes the electric-vehicle maker is approximately three years ahead of the competition when it comes to powertrain technology, power and data architecture and its operating system. He believes the company’s China ramp shows it has “higher organizational risk tolerance than peers and is likely to see accelerated learning cycles driven by that tolerance as the company matures.”
Last week, the first Model 3 vehicles began rolling off the assembly line at Tesla’s Shanghai Gigafactory. The company expects the plant to produce 250,000 vehicles each year and has plans to build its first European Gigafactory in Berlin.
Tesla shares have been on fire at the start of 2020, gaining almost 20 percent as a slew of positive news has sent short-sellers, or those betting shares would fall, scrambling to cover their losing bets which have already reached more than $2 billion this year.
Tesla reported a surprise third-quarter profit on Oct. 23, sparking a rally of almost 96 percent. Along the way, Musk introduced the company's Cybertruck and 2019 deliveries topped the lower end of his forecast.
The electric-vehicle recently became the largest U.S. automaker in history and is bigger than both Ford and General Motors combined.
“Given the resolution of manufacturing bottlenecks and demonstration of strong consumer demand, we believe TSLA is becoming a must-own stock and could benefit from inclusion in additional indexes,” Rusch wrote.