Tesla stock on track for the longest time in its history
The clouds are finally parting for Tesla Inc. investors who were stuck with the electric-vehicle maker through a rough ride. The stock has surged to more than doubling this year, thanks to a rush of good news for the company and the return of bullish market conviction.
In a 11-day run, the EV company added more than $200 billion to its market valuation, with the shares on pace to tie with its longest-ever winning streak. If Friday's gains hold through the end of session, it would be the second time in Tesla's history that the shares will have managed this feat.
Tesla has been a wild stock for a long time, but it has only won two double-digit wins in its history, according to Bespoke Investment Group. The first was 10 trading days ending in April 2020, and the second was less than a year later, in January 2021.
On Friday, Tesla shares surged to 252.42 from its highest level for the first time in years, bringing the year's increase to 103%. This week's 17% advance so far is set to be the best since January.
Friday's rally comes after General Motors Co. on Thursday said it would adapt its EVs to Tesla's Superchargers, following a similar move from Ford Motor Co. and 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, RBC Capital Markets analyst Tom Narayan said in a note on Thursday. The tide lifts all boats and if consumers see their neighbor's EV, they are more likely to buy one themselves, which increases the likelihood that they buy a Tesla. After a week of testing, all Tesla's Model 3 sedans were eligible for the full U.S. tax credit under a new criteria set by the U.S. Treasury Department, while 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.
The market frenzy for all things artificial intelligence that further fueled an already buoyant sentiment for technology and mega-cap stocks and pushed the S&P 500 Index into the bull market territory.
Although the jury is still out on whether Tesla's valuation can provide any further AI-related boost, or if even self-driving technology it is building can be equated with the generative AI trend, the stock has undoubtedly caught the fever.
Tesla bull and Cathie Wood, the chief executive of ARK Investment Management, have said that Tesla's AI play will help its stock price rise to about $2,000 in 2027. Without AI, Wood expects the stock to be worth only about $400 by the same time.
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 of $1.36 billion a day into US markets over the past week through Thursday.
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, wrote Vanda s Marco Iachini and Giacomo Pierantoni in a note to clients.
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