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How Tesla could be cannibalizing itself

Tesla shares jumped more than 10 percent this week, after the electric carmaker announced an upgrade to its Model S line. However, according to one analyst, the automaker could end up eating its own sales with the move.

On Tuesday, the company announced an upgraded version of its Model S line called the 70D. The new all-wheel-drive base level car comes with a larger battery pack, 240-mile range and auto-pilot capability. It also comes with a $75,000 price tag, which is about $5,000 more than the previous version.

"Consistent with our recent downgrade, the new 70 makes the upgrade to the 85D less compelling now and could cannibalize sales of the more expensive model in our view," CLSA America's Tesla analyst Andrew Fung told "Fast Money" this week.

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"This would obviously weaken the mix this year, which hits at our concerns around the margin pressure and downward earnings revisions that could happen in the second half of 2015," he added.

Fung downgraded the stock on March 25 to an underperform rating from an outperform rating on concerns that it could face near-term earnings risk from Model X margins. The firm also cut its price target to $220 from $275.

The stock is up about 5 percent since Fung made the call, but he defended the change.

"Beyond the quarter, we still think that given just the operational performance, which has been soft for several quarters and again that potential need to raise additional capital, our expectations are for investors to stay very focused on the margins and earnings outlook for the rest of this year," he added.

Not down on Tesla

Tesla Model S dashboard
Tesla Motors

Fast Money Trader Guy Adami doesn't agree with that Fung's pessimism. Ahead of the recent breakout in the stock, Adami said recently that the stock could be poised for a run-up and that call paid off big time.

In the wake of the stock's more than 10 percent surge this week, Adami remains a believer. "I think the trade is you stay long. I think you flushed all the weakness out, and I think the momentum now is to the upside," he added.

Other news helping boost the stock over the last week is the company's first-quarter delivery numbers. Tesla reported it delivered 10,030 vehicles for the first quarter, which is a 55 percent increase from a year earlier.

"Going forward, Tesla will publish the number of new car deliveries within three days of quarter end. We have decided to take this approach, because inaccurate sources of information are sometimes used by others to project the number of vehicle deliveries," Tesla CEO Elon Musk said in a statement. Tesla is targeting sales of 55,000 vehicles this year, including the company's first sports utility vehicle, the Model X.

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In the next couple of weeks, Tesla has a few events that could boost the stock or send it sinking. Musk teased via twitter a new product line unveiling on April 30, and the company is expected to report earnings sometime in the beginning of May.