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Why Tesla Stock Jumped on Wednesday (Even as the Market Fell)

By Daniel Sparks - Apr 15, 2020 at 11:43AM

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One analyst thinks shares of the electric-car maker are headed to $864.

What happened

Shares of Tesla (TSLA -0.32%) jumped on Wednesday, rising as much as 6.1%. As of 10:50 a.m. EDT, the electric-car maker's stock was up about 4.1%. The sharp rise notably occurred even as the market fell. As of this writing, the S&P 500 was down 2.6%.

The growth stock's move higher came after Goldman Sachs initiated coverage of Tesla with a buy rating.

Tesla vehicles, including the Model 3, Tesla Semi, Model S, and Model X

Image source: Tesla.

So what

Accompanying the buy rating for the stock, Goldman Sachs analyst Mark Delaney gave the electric-car maker's shares an $864 12-month price target. Delaney is bullish on the company's leadership position in electric vehicles and the long-term potential of the overall electric vehicle market. Specifically, the analyst believes annual electric vehicle sales will increase from about 2 million today to 15 million by the end of the decade.  

In addition, Tesla benefits from an early-mover advantage, a powerful brand, vertical integration, and the recent launch of its Model Y crossover, the analyst argues.

Now what

Morgan Stanley analyst Adam Jonas, however, noted on Wednesday that Tesla investors should be prepared for challenges ahead, particularly given the stock has doubled in just four weeks. Recent high volume in the trading of Tesla shares and potential difficulties when it comes to restarting the automaker's production lines in California are risks for the stock, he suggests. 

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