Tesla’s stock narrowly missed hitting a new all-time high on Monday, driven primarily by optimistic news surrounding their robo-taxi initiative. By Tuesday, shares skyrocketed through their previous record levels, just a year after the last peaks, following an increase in target price from Mizuho.
At its peak on Tuesday, Tesla shares hit $491.50, marking the first occasion they’ve surpassed $490. The last record high was $488.54, achieved on December 18, 2024.
The closing price ended at $489.88, also a record-setting figure, marking the first close above $480, a noticeable uptick from the closing price of $479.86 on December 17, 2024. This rise came despite a lackluster performance in the overall market, as the S&P 500 and Dow Jones dipped by 0.2% and 0.6%, respectively.
The latest rise can be traced back to Trump’s reelection in November 2024. With CEO Elon Musk as a prominent backer of the president, many investors felt that Tesla’s closeness to the White House would be beneficial. However, the relationship proved problematic for Tesla’s brand reputation. Musk’s political endeavors arguably put the company’s image in jeopardy, especially when Trump moved to eliminate the federal EV purchase tax credit. The expiration of this federal benefit at the end of September had a slightly negative impact on EV sales during October and November.
Despite these challenges, Tesla successfully rolled out its AI-driven robo-taxi service in Austin, Texas in June, signaling a potential boost in future earnings growth.
The excitement surrounding these robo-taxis largely pushed stock prices higher. Tesla shares jumped after Musk tweeted that the company was testing robo-taxis without safety overseers in the vehicles. This is an important step towards expanding Tesla’s operations across the country.
Initially, Tesla’s robo-taxi service included safety monitors in the front passenger seat for oversight. Musk indicated in October that he hoped to eliminate these safety features by the end of the year.
Analyst Vijay Rakesh from Mizuho highlighted that advancements in Tesla’s Full Self-Driving technology could be a key factor in a speedier increase of their robo-taxi fleet in cities like Austin and San Francisco while potentially advancing the removal of safety supervisors.
Looking towards the future, he’s assessing developments at Alphabet’s Waymo, due to its current achievement of around 450,000 fully autonomous taxi rides each week with aspirations to bump that number to 1 million weekly by late 2026.
Rakesh has adjusted his price target for Tesla stock upward from $475 to $530 while maintaining a “Buy” rating.
Barclays analyst Dan Levy also noted a growing enthusiasm for Tesla’s autonomous driving and robo-taxi narrative, especially with prospects of eliminating safety monitors by the year’s end. Still, unanswered questions linger regarding the scale and timing of the rollout.
Concern exists over how effectively Tesla can expand its operations amid varied state regulations, and Levy continues to hold a “Hold” rating with a $350 price target for the stock.
Overall, approximately 40% of analysts keeping an eye on Tesla consider it a “Buy,” a bit shy of the average buy ratio of 55% for stocks in the S&P 500. Tesla’s average share price target sits at around $400 according to FactSet.
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