Why This Analyst Predicts Tesla's Stock To Reach $298 In The Next 12 Months

Shares of Tesla Motors Inc TSLA took a beating on Thursday post its press conference to end ‘range anxiety'. Colin Rusch, Northland Capital Market senior analyst, was on CNBC after Tesla's conference to discuss why he expects Tesla to reach $298 in the next 12 months.

The Two Factors

"So, as we look out the valuations that we are looking at right now is discounted out to 2020 and they need to execute on the Gen 3," Rusch said. "[It was] Model 3 widely available car to be executed in a lot of adoption of that car plus the Gigafactory, which is really going to drive the cost out of the manufacturing model and so those are the two things that we are looking out with the valuation on the stock and we think that's what at stake for investors right now and why we are not seeing much of a reaction to the stock up on this news today."

$298 In 12 Months

On his price target of $298 on Tesla, Rusch said, "We are looking [at this] as a discounted model on that cash flow in 2020. So we are looking at this as a 12-month price target."

Gigafactory A Revenue Driver

Rusch was asked if the Gigafactory can be a revenue driver for Tesla. He replied, "Undoubtedly this is going to be a revenue driver for the company and not only is it taking cost out of their supply chain, but they are going to be able to take these batteries and put them in stationary storage applications and recently we updated, increased our price target based on the lower risk [factory] of the Gigafactory because those batteries can actually get adopted being […] grid, not just to mobile vehicles."