What happened
The stock of Tesla (TSLA 6.24%) has been on a weeklong recovery run after it dropped as Elon Musk sold more than $15 billion in shares since early November. The stock has gained more than 20% in the last five days, and that trend continued at the open today, with a rise of 2.3%. The stock then reversed course, dipping as much as 0.8% as of 10:57 a.m. ET, but the initial jump is what's notable.
So what
Musk sold shares partly to prepare to pay taxes for options he needed to exercise because they are expiring next year. Musk addressed his transactions publicly, and Tesla stock drifted down as he continued to sell. But investors seem to be happy that he has effectively completed those sales. Now, widely followed Wall Street analyst Dan Ives thinks Tesla will double its production capacity in 2022, leading to further gains in the stock.
Image source: Tesla.
Now what
Tesla is already on pace to deliver well more than the 750,000 electric vehicles (EVs) it projected for 2021. Ives said in a note covered by EV news website Electrek that the company should have the capacity for 2 million EVs by the end of next year. In comparison, Ford CEO Jim Farley recently estimated that his company plans to produce 600,000 EVs globally by 2023. And General Motors expects to sell 1 million EVs by 2025, CNBC reports.
Ives pointed out that EV leader Tesla has the "high-class problem of demand outstripping supply." Its capacity increase will come from its new plants in Texas and Berlin, Germany. Production out of those factories will also allow vehicles built at its Shanghai plant to supply more of the Chinese market. That's important, particularly as China's domestic capacity ramps up and others enter that market. Ford, for example, began selling its new electric Mustang Mach-E in China last weekend.
Ives has a $1,400 price target on Tesla stock, with a bullish case where it could reach $1,800 per share. With Musk completing his well-publicized share sales, investors seemed to be acknowledging Ives' view in early trading today.
