What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ:TSLA) jumped 4.2% in the pre-market session after Cantor Fitzgerald analysts upgraded the stock from Neutral to Buy. The analysts added, "With Tesla's shares now down ~45% YTD, we upgrade Tesla to Overweight (from Neutral) ahead of upcoming material catalysts; Our $425 12-month PT is unchanged."
Separately, Bloomberg reported the company received approval from the California Public Utilities Commission for a passenger transportation permit. The permit represented significant progress towards Tesla's plan to enter the autonomous Robotaxi market. Some analysts considered the move a potential contributor to future growth.
After the initial pop the shares cooled down to $235.02, up 4.2% from previous close.
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What The Market Is Telling Us
Tesla’s shares are extremely volatile and have had 121 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was a day ago when the stock dropped 6.3% after the EV battle in China continued to heat up as BYD announced its new "Super e-Platform," a technology it claimed could charge electric vehicles in just five minutes.
The company added that the new technology had a peak charging speed of 1,000 kilowatts. To put it in perspective, Tesla's latest superchargers maxed out at 500 kilowatts (at the time BYD announced the Super e-Platform), so BYD's tech would be doubling that.
If the tech lives up to the hype, range anxiety (fear that an EV battery would run out before driving to the destination), one of the biggest roadblocks for EV adoption, could become a thing of the past.
And it was not just BYD making moves. Zeekr, another rising star in China's EV space, announced it was offering advanced driver-assistance features to its domestic customers for free. That's another headache for Tesla, which had been considered to rely on its Full Self-Driving (FSD) subscriptions as a competitive edge.
It all adds up to a fierce fight for market share in China, and Wall Street is starting to take notice. Some expect Tesla's growth and profitability to face greater challenges. For example, RBC analyst Tom Narayan lowered his Tesla price target to $320, citing increased pressure on the company's full self-driving (FSD) subscription model. He also felt Tesla's FSD subscription fee would drop from $100 to $50 per month by 2026. On top of that, Narayan lowered his estimates for Tesla's market share in both China and Europe, cutting it from 20% to just 10%.
Tesla is down 38% since the beginning of the year, and at $235.02 per share, it is trading 51% below its 52-week high of $479.86 from December 2024. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $8,244.
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