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Why Tesla Motors, Inc. Stock Jumped Today

By Daniel Sparks – Feb 11, 2016 at 11:19AM

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Improving cash flow and robust demand have investors more optimistic about the electric-car maker.

What: Shares of electric-car maker Tesla Motors (TSLA -4.59%) jumped as high as 13.6% on Thursday morning and are up 7% at the time of this writing. The optimism toward the stock on Thursday follows the company's fourth-quarter update, which was released after market close on Wednesday.

Model X. Image source: Tesla Motors.

So what: Overall, the update brought comforting news to investors, particularly when it came to cash flow and demand.

Positive operating cash flow of $179 million during the quarter was a welcome improvement, following the company's consistent trend of burning cash in operations.

Analyst chatter about soft demand turned out to be baseless. Orders for Model X were up 75% compared to the year-ago quarter with the company doing as much as it can to suppress demand by not showing the vehicle in stores or giving it out for driving tests. For both Model S and X combined, Tesla noted it sees no "perceptible impact" from falling gas prices on order growth and that overall order rates are increasing.

Now what: Looking forward, Tesla has big expectations for the year, expecting vehicle sales to climb from about 50,600 in 2015 to 80,000 to 90,000 in 2016. To achieve this growth, the company will need to ramp up production of its Model X SUV. In other words, now it's all about execution.

Daniel Sparks owns shares of Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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