Tesla: Shares on Pace to More Than Double This Year
Tesla investors who have held onto their shares during the rough ride have finally seen a rush of good news for the company. Tesla has added more than $194 billion to its market valuation in an 11-day run, putting shares tied with their longest-ever winning streak. Tesla shares are on pace to more than double this year. Let’s take a look at the recent good news for the company that has led to its rapid gains since late May.
Tesla’s Winning Streak
Tesla has only posted two other double-digit winning streaks in its history. The first was 10 trading days ending in April 2020, while the second—and the longest one—was less than a year later in January 2021. Bespoke Investment Group reported that Tesla has been a “wild stock” over the years.
Tesla shares closed up 4.1% at $244.40 Friday, bringing this year’s surge to 98%. This week’s 14% advance was the best since January.
General Motors and Ford Moves
General Motors Co. on Thursday said it will adapt its EVs to Tesla’s Superchargers, following a similar move from Ford Motor Co., all but ensuring it will become an industry standard in the US. “More people buying EVs (whether they be GM or Ford for that matter) increases the likelihood that they buy Teslas,” said RBC Capital Markets analyst Tom Narayan. “A rising tide lifts all boats, and if consumers see their neighbor having an EV, they are more likely to buy one themselves – and this increases the chances they buy a Tesla.”
Elon Musk’s Social Media Platform
Musk’s social media platform Twitter got a new chief executive officer, calming some investor angst about Musk being spread too thin among his many high-profile ventures.
Tesla’s Model 3 Eligibility for Tax Credits
All Tesla Model 3 sedans became eligible for the full US tax credit under new criteria set by the US Treasury Department.
Market Frenzy for AI
There is a market frenzy for all things artificial intelligence that further fueled an already buoyant sentiment for technology and mega-cap stocks, pushing the S&P 500 Index into the bull-market territory. Though the jury is still out on whether Tesla’s rich valuation allows for any further AI-related boost, or if even the self-driving tech it is building can be equated with the generative-AI trend, the stock has undoubtedly caught the fever.
Tesla: Biggest AI Play
Tesla is considered the biggest AI play, which Cathie Wood, the CEO of ARK Investment Management, predicts will help its stock price rise to about $2,000 in 2027. Without that AI push, Wood expects the stock to be worth only about $400 by the same time.
Retail Investors Flocking to Tesla
Retail investors, among whom Tesla enjoys a cult-like following, are clearly listening. According to data from Vanda Research, the AI-mania has helped bring mom-and-pop traders back into the game after a 3-month long lull, with an average flow $1.36 billion a day into US markets over the past week through Thursday. However, Vanda’s Marco Iachini and Giacomo Pierantoni noted that “better-than-consensus economic data and the resolution of the debt ceiling were among key macro drivers of this rebound in participation, but AI’s push is what decisively boosted animal spirits in recent weeks.”