What happened

Shares of Tesla (NASDAQ:TSLA) jumped on Friday, rising about 6% at market open. As of 10:00 a.m. EDT, the stock was up about 4%.

The growth stock's gain followed an analyst's upgrade. In addition, shares are gaining back some of the losses from a sharp downturn in yesterday's stock price.

A look inside Tesla's Megapack energy storage system.

A look inside Tesla's Megapack energy storage system. Image source: Tesla.

So what

Piper Sandler analyst Alexander Potter boosted his 12-month price target on Tesla stock from $480 to $515.

The heightened view for Tesla comes after an analysis of the company's energy business and Elon Musk's compensation package -- factors that are generally "poorly understood" but are also becoming increasingly material for the company, explains Potter. Regarding Tesla's energy business, which includes energy storage and solar power product, "We anticipate sharply higher demand for these products," Potter said. 

Shares have recovered some lost ground from yesterday, when the stock fell along with a broader market sell-off of many technology growth stocks.

Now what

Tesla saw a nice 26% sequential uptick in energy generation and storage revenue in Q2, with segment sales coming in at $370 million. Notably, Tesla said in its quarterly update that demand was robust enough for its commercial-scale energy storage product Megapack, that the company remains production-constrained with the product.

While this business is only a fraction of Tesla's $6 billion of total revenue during the quarter, CEO Elon Musk thinks Tesla Energy will eventually become as big as its automotive business.