What happened

Shares of Tesla (TSLA 0.38%) jumped sharply for a third day in a row on Thursday, climbing as much as 6.2%. The stock is up 4.2% at 1:30 p.m. EDT, and has risen a total of about 18% in the past three trading days.

The stock's gain this week has been triggered by the electric-car company's Tuesday announcement of accelerating Model 3 production. But the gain also notably follows a rough few weeks in which Tesla's stock price was pummeled, falling from nearly $360 earlier this year to about $250 earlier this month; so Tesla's gain over the last three days could be partly fueled by investors who believe the pullback in the stock price went too far.

Tesla vehicles outside of the company's factory

Image source: author.

So what

Earlier this week, Tesla announced that Model 3 production had surged to 2,000 units per week, up from a rate of 1,000 units per week about three months ago. In addition, the automaker said it expected to hit a production rate of 5,000 Model 3s per week by the end of Q2. This progress, Tesla said, means the company won't need to raise any capital through debt or equity this year. 

The update was warmly welcomed by investors as it followed a stream of bad news, including a recall and a fatal crash involving Autopilot.

Now what

Now Tesla needs to deliver on its ambitious targets -- something it has had trouble doing in the past. The most recent Model 3 production rate, though a remarkable improvement, was still behind management's target of 2,500 units per week, and was the latest in a series of misses for the company.

While a recent track record of consistently falling short of its targets means it's unlikely Tesla will achieve a production rate of 5,000 units per week by the end of Q2, investors are perhaps optimistic that the automaker will come close. After all, the market values the company at nearly $50 billion.