Tesla’s pre-market rally of more than 10% exceeds $870, multiple factors contributed

Tesla rose more than 10 percent to $870 in premarket trading on Tuesday. Baron, its majority shareholder, said its revenue would exceed $1 trillion in 10 years, the sources said. Tesla’s shares closed up nearly 20 percent on Monday, their biggest one-day gain in six years. Tesla’s shares jumped after Argus Research raised its target price to a New Wall Street high of $808 a share. But even Argus’ target price is below the level it was at the start of Tuesday’s session.

Tesla's pre-market rally of more than 10% exceeds $870, multiple factors contributed

By Monday’s close, Tesla’s shares had risen more than 80 per cent this year, helped by analysts raising their target prices to catch up with the stock and shorting shorts by investors.

But analysts have not kept pace with Tesla’s share price. Analysts’ 12-month average target price was $493, up from $334 in December, according to FactSet. But the new target price is more than 40 per cent below the stock’s pre-market price on Tuesday.

Meanwhile, short-sellers are vying with investors for more than $8 bn to short the stock since the start of the year, according to S3 Partners. The company said shorts have bought $12.6 billion worth of stock since Tesla’s share price fell below $200 a share last June.

This could be a factor driving up Tesla’s share price: if enough shorts buy at the same time, they can create higher demand and push the share price higher, also known as “rolling”.