Tesla Stock Upgraded On Model 3 Outlook

tesla-stock-upgraded

Recently, Tesla shares have jumped by as much as $25 from $325 to $350 following the release of their most recent earnings report that beat most analyst estimates. Tesla’s stock has since then been upgraded by analysts. Along with the positive earnings report, the market’s reception of their Model 3 vehicle has also helped Tesla’s stock to rise in the past couple of months.

The Model 3 vehicle which is the company’s most affordable vehicle yet at a starting price of $35,000 has been receiving daily orders of around 1,800 since its official launch last month. The company is now continuously boosting its efforts to meet rising production targets. Tesla is set to produce 20,000 vehicles per month before the end of the year and more than 1,500 units by next month.

Tesla shares are now projected to rally by as much as $411 during the next twelve months due to the continuous demand for the Model 3 vehicle. However, due to the company’s massive cash burn along with the lack of huge returns in the company’s finances for the past couple of quarters. Some have also raised their concerns to whether the company can keep up with its own target delivery numbers after it missed its target deliveries for the year 2016.

According to analysts, investors should stop betting against Tesla due to the ongoing demand for the Model 3 along with the efforts of the company to boost production and address demand. Other analysts have also raised their target price on Tesla’s stock by as much as $444.

Last week, the company announced that it would issue $1.5 billion worth of bonds to help boost its balances and support the ramping up of the Model 3 vehicle production. This was hinted by Tesla chief executive officer Elon Musk during the company’s earnings call who warned investors that a debt issuance should be expected instead of an equity tap. The said bonds are set to mature by the year 2025. Tesla’s overall debt will then stand at $8.2 billion, with $4.7 billion becoming a long-term debt for the company. Musk has also stated that he is confident that the company could meet their targets and produce around 10,000 Model 3 units by next year at a weekly rate.

The $411 price target send Tesla’s shares up by almost 2% to $364 from having previously traded at around $357 during Friday’s trading session.  It traded by as high as $367.66 during Monday’s market session.

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