What happened

Shares of Tesla (NASDAQ:TSLA) surged on Thursday, rising about 7.1% as of 2:30 p.m. EST.

The growth stock's gain was likely driven by a number of factors, including a bullish day in the overall market, political news, and analyst optimism for the stock.

Tesla vehicles

Image source: Tesla.

So what

RBC Capital analyst Joseph Spak upgraded Tesla stock on Thursday, giving shares a sector perform rating, which is like a hold rating. This is up from an underperform rating previously. Along with the rating change, the analyst boosted his price target for the stock from $339 to $700, citing the automaker's access to inexpensive capital and its growth opportunity.

Meanwhile, the stock is likely also getting a lift from a bullish day in the overall market. As of this writing, the S&P 500 and Nasdaq Composite are up 1.4% and 2.3%, respectively.

Of course, investors are likely also incrementally bullish on Tesla because Congress has confirmed President-elect Joe Biden's election victory. Democrats are known for pushing more green energy legislation, which could benefit Tesla.

Now what

With a 15% gain year to date for Tesla shares, the company now commands a market capitalization of nearly $800 billion. Investors should be cautious about investing in shares at these levels, as the valuation seems to be pricing in near-flawless execution in the coming years.

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.