Shares of Tesla (NASDAQ:TSLA) jumped sharply on Wednesday, rising 4.9% by the time the market closed. The stock's gain today adds to a bullish run over the last three months, and it follows optimistic commentary from an analyst Tuesday afternoon.
Tesla stock could hit $556 within 12 months, Argus Research analyst Bill Selesky said in a note to investors on Tuesday. That price target is the highest on the Street -- and it's up from his previous 12-month price target of $396. As of the closing price of $492.14 on Wednesday, the price target implies 13% upside.
Selesky cited better-than-expected fourth-quarter deliveries and the rapid construction and subsequent start of Model 3 production at Tesla's factory in China as key reasons for his optimism.
Notably, Tesla delivered a record 112,000 vehicles in Q4, which were 6,000 more than analysts expected. The company also said it had "demonstrated production run-rate capability of greater than 3,000 units per week [at our new factory in China], excluding local battery pack production which began in late December."
Shares of Tesla have been surging in recent months as it became clear that the electric-car company was making substantial progress on its factory in China. The automaker started delivering China-made Model 3 units to employees at the end of December, and it began deliveries of these vehicles to customers in the market this week, serving as a catalyst for the stock's rise earlier this week. In total, shares are up 11% this week.
Now Tesla will need to follow through on investors' high expectations and quickly ramp up production and deliveries in China.