Why Tesla stock popped on Monday

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of electric cars leader Tesla (NASDAQ: TSLA) stock jumped 2.2% in 11:05 a.m. ET trading Monday, the first day after a long holiday weekend. Most of the Tesla news these past several days has concerned boardroom maneuverings as Elon Musk angles for control over social media company Twitter (NYSE: TWTR).

But that’s not what’s pushing Tesla stock higher today. 

So what

Instead, what’s giving Tesla investors hope today is a story that ran in The Wall Street Journal over the weekend, predicting that Tesla might be able to resume — at least partially — production of cars at its Chinese gigafactory this week.  

Tesla is expected to begin running one single “shift” per week and then increase that to two shifts by the end of April, reports the paper. Assuming that shifts at the Shanghai plant are run as the company runs them in the U.S. (four shifts per week, 12 hours per shift, operating three days on, three days off), that should bring Tesla back to 50% capacity in China by the end of this month.  

Now what

There’s been no confirmation yet that Tesla has actually succeeded in getting its factory restarted in Shanghai as of this writing. Reuters confirmed that the company is “preparing” to reopen, noting also that Tesla’s workers will need to live on site at the factory in order to work there while the city remains under lockdown. And Beijing is said to have approved Tesla for “priority” in reopening — but that falls short of an official confirmation that reopening has happened.  

Tesla is relying on Shanghai to do much of the heavy lifting toward its goal of producing more than 1 million cars annually worldwide this year, and the longer the Shanghai factory remains shuttered, the harder it will be for Tesla to hit that goal. Eventually, however, Tesla aims to expand Giga-Shanghai to the point where this single factory is able to produce 1 million cars annually on its own.  

So long as you agree that the Shanghai gigafactory will reopen eventually, it’s probably best to think of this current delay in reopening as just one more bump in the road in a years-long growth story for Tesla. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock popped on Monday appeared first on The Motley Fool Australia.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Tesla and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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