Tesla (TSLA) soars past $700 amid Panasonic update, Wall St upgrade

Tesla stock (NASDAQ:TSLA) broke the $700 barrier on Monday’s opening bell, trading as high as $735 per share as of writing. Amidst this rise was an update from Tesla’s battery partner Panasonic, which reported a profit thanks to its operations at Giga Nevada, as well as an upgrade from a Wall Street firm, which gave the company an optimistic $808 price target. 

Last year, a key bear narrative against Tesla emerged, alleging that its relationship with its primary battery supplier, Panasonic, was turning sour.  These rumors came about following a report from the Nikkei Asian Review, which conveniently did not cite a source, stating that Panasonic was freezing its investments in Tesla’s Giga Nevada facility. This resulted in media coverage alleging that Tesla and Panasonic were in a “public battle.” 

Panasonic President Kazuhiro Tsuga eventually debunked these reports, stating that the Japanese company’s relationship with the American electric car maker was not in danger in any way. These statements were ultimately proven wrong recently, when Panasonic reported its first quarterly profit in its battery business with Tesla. During an earnings briefing, Panasonic’s Chief Financial Officer Hirokazu Umeda remarked that the two companies are now finding their optimal rhythm in Giga Nevada. 

“We are catching up as Tesla is quickly expanding production. Higher production volume is helping to push down materials costs and erase losses,” he said, adding that Panasonic will be focusing its resources on meeting the demand for the Model 3 and Model Y. 

Tesla’s good news is not just coming from Panasonic’s side. On Monday, the company also received an upgrade from Argus analyst Bill Selesky, who raised the firm’s price target for the electric car maker to a “street high” of $808, significantly higher than his previous estimate of $556 per share. The Argus analyst also maintained a “Buy” rating on the electric car maker. 

In his note to clients, Selesky focused on Tesla’s strong demand for the Model 3, which continues to be strong despite the vehicle being on sale for years now. The analyst also highlighted that Tesla is positioned to improve and maintain its lead in the electric car industry. 

 “Our positive view assumes continued revenue growth from the legacy Model S and Model X, as well as strong demand for the new Model 3, which accounted for more than 80% of 4Q19 production. Despite past production delays, parts shortages, labor cost overruns, and other difficulties, we expect Tesla to benefit from its dominant position in the electric vehicle industry and to improve performance in 2020 and beyond,” he wrote. 

As of writing, Tesla stock is up 10.00% at $715.61 per share.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

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