Please ensure Javascript is enabled for purposes of website accessibility

Why Tesla Stock Jumped 6% This Morning

By Daniel Sparks - Sep 18, 2020 at 9:15AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This analyst thinks the electric-car company's shares are headed to $515. Here's why.

What happened

Shares of Tesla (TSLA 4.53%) 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. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$737.12 (4.53%) $31.91

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.