The Surprising Reason Tesla Could Jump 25%

The “surprisingly supportive political environment” is one reason why Morgan Stanley analyst Adam Jonas just upgraded Tesla Motors shares to “Overweight,” recommending that clients buy the stock. Jonas thinks it could rise to $305, 25% above current levels.

While investors initially worried about Tesla's prospects in a Donald Trump presidency, the stock is up 35% since early December, including a 2.3% gain Thursday, bringing the stock to $244.

Tesla got some other good news Thursday, when federal regulators closed an investigation into Tesla’s autopilot features, without finding Tesla at fault for a fatal crash last May.

As for the Model 3, the biggest immediate issue for Tesla, Jonas thinks the company will do a “soft launch” at the end of this year and then go on to sell 183,000 Model 3s in 2018. While that’s above his prior estimate of 114,000, it’s still way below Tesla’s own 500,000 target.

Other tech companies have been scrapping plans to make their own vehicles, which is good for Tesla, but there’s still competition in autonomous-driving technology. Tesla has “strategic urgency to get as many units on the road collecting as much data as soon as possible to maintain its lead in this area,” according to Jonas.

Big Picture: Tesla might sell fewer Model 3 vehicles in 2018 than its 500,000 target, but one analyst points out that it’s hard to put a price on the company’s good standing with the Trump Administration.

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