What happened

Shares of Tesla (NASDAQ:TSLA) popped on Monday, rising 8.3% as of 12:14 p.m. EST. This put the stock at just over $517, an all-time high.

The gain follows an analyst's decision to significantly increase his 12-month price target for the stock, citing the electric-car maker's achievement of "critical scale," enabling consistent free cash flow. 

Tesla's Model S, 3, X, and Y

Image source: Tesla.

So what

Oppenheimer analyst Colin Rusch believes Tesla's business has improved markedly recently.

Tesla's "risk tolerance, ability to implement learnings from past errors, and larger ambition than peers are beginning to pose an existential threat to transportation companies that are unable or unwilling to innovate at a faster pace," Rusch wrote in a note to investors on Monday. In addition, the analyst believes the company's higher deliveries have given Tesla the economies of scale to generate positive free cash flow (cash flow from operations less capital expenditures).

Now what

The stock's gain on Monday adds to a sharp rise recently. Tesla shares are now up 108% over the past three months.

With the stock doing this well, it puts increased pressure on the company to deliver on its plans to ramp up production at its new factory in China and to bring the Model Y to market this year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.