Tesla (TSLA) Stock Went Up 9% Yesterday and Added 60% in a Week after Stock Upgrades

UTC by Andy Watson · 3 min read
Tesla (TSLA) Stock Went Up 9% Yesterday and Added 60% in a Week after Stock Upgrades
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Yesterday, Tesla (TSLA) stock jumped 9.05%. The company is firmly on the seven-day winning streak, ending the session at a nearly six-week high.

Upgrades from Credit Suisse and Goldman Sachs, as well as better-than-expected first-quarter sales, pushed Tesla Inc (NASDAQ: TSLA) stock up 60% for the week to $709 per share at the close on Tuesday. The electric carmaker is still firmly on the seven-day winning streak, ending the session at a nearly six-week high. Yesterday, TSLA jumped 9.05%. The market cap is 130.70 billion.

Tesla (TSLA) Stock Is On Fire after Upgrades

Earlier this month, Tesla surprised virtually everyone when it revealed that in the first trimester of 2020 it produced 103,000 and delivered 88,400 vehicles, marking the best first-quarter performance for the carmaker. The fact that the results came amid the ongoing COVID-19 pandemic made the news even more important and drove analysts to rethink their stock ratings.

The latest in line to introduce upgrades for Tesla (TSLA) stock were analysts at Credit Suisse and Goldman Sachs. They, too, like those at Jefferies before them, believe that Tesla’s sole focus on electrification, without the “dilemma of balancing a transition from ICE (internal combustion engine) to EV” that troubles many traditional vehicle makers, is what gives the Silicon Valley company an upper hand.

“We are positive on Tesla because we believe that the company has a significant product lead in EVs, which is a market where we expect long-term secular growth,” Goldman Sachs analyst Mark Delaney said in a note to investors.

Delaney raised the price target for Elon Musk’s company to $864 and tagged it with a “buy” rating.

Meanwhile, Credit Suisse’s Dan Levy upgraded the stock to “hold” and increased the price target to $580; still down over 20% from yesterday’s close of $709, though.

Burning Cash, Not Gasoline

Due to the closure of Fremont, California factory—which, despite Musk’s claims that the pandemic was “dumb,” led him shortly thereafter to inform Tesla’s landlords it would “reduce our monthly rent obligations effective immediately”—Levy sees Tesla as burning some $300 million in cash a week.

However, having improved its cash position significantly in Q4 of 2019, the analyst believes the environment-friendly carmaker will be able to cope with the crisis. (Tesla’s cash on hand currently stands at $6.5 billion.)

Although Tesla’s recent performance gives bulls some optimism, and although there is no doubt that a sharp rebound of production and demand in China will be the crucial growth driver in the current trimester, there’s little hope that Musk’s brainchild will reach its full-year delivery target of 500,000 vehicles.

With the stock up over 175% for the past six months, Tesla right now looks better equipped than most to navigate the stormy waters of the coronavirus pandemic. The next earnings release is scheduled for April 22. The average estimate puts loss per share at $0.08, while revenue is expected to land at $6.02 billion.

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Andy Watson
Author Andy Watson

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