At the end of last week, Tesla (NASDAQ:TSLA) announced it had finally received regulatory approval to begin producing electric vehicles at its Berlin Gigafactory. While TSLA stock could not escape the market downturn today, this production update brings with it more good news.
What’s Happening With TSLA Stock
Wedbush analyst Dan Ives is one of Wall Street’s most respected voices on Tesla. Recently, the notorious bull issued his take on the company’s new development. What he saw as a “major overhang” has been removed, helping clear a path for TSLA stock to soar in the year ahead.
This week isn’t off to a good start for the stock so far, though. Shares closed out the day down by 4%. These gradual declines are in keeping with the performance that we saw from TSLA last week. While slumps are never encouraging, investors should take comfort in the recent milestone that Tesla has achieved.
Why It Matters
Ives remains as bullish as ever on TSLA stock. In a note to investors, he acknowledged that it had been frustrating for Wall Street to watch the company’s struggles regarding the Berlin Gigafactory.
“We cannot stress the production importance of Giga Berlin to the overall success of Tesla’s footprint in Europe and globally,” Ives wrote in the note. The analyst also noted that “the current Rubik’s Cube logistics of producing cars in China at Giga Shanghai and delivering to customers throughout Europe was not a sustainable trend.”
There’s plenty of reason to suspect that Ives is correct in his assessment of TSLA stock’s future. Although Tesla’s path to delivering vehicles in Europe was likely not sustainable, it did help the company carve out market share. Now that it has eliminated a final regulatory barrier, there is nothing to prevent Tesla from filling Europe’s EV needs.
What It Means
The note from Ives also comes with a reminder of his $1,400 price target. While that is significantly higher than the current share price, it is absolutely worth noting. If Ives is correct in his assessment, the current declines will prove to be a buy-the-dip opportunity, generating returns of almost 70% for investors.
Now that the company has a new continent to conquer, TSLA stock has nowhere to go but up. Electric vehicle demand is rising throughout Europe and Tesla is almost perfectly positioned to fill it. Even if Ives’ price target falls short, the stock will still yield significant returns for investors throughout the year.
Investors should not overlook the significance of this regulatory victory.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.