Challenges for Tesla’s Winning Streak: Market Forces and AI Perception
Tesla’s stock has enjoyed an impressive winning streak, spanning 13 consecutive days and contributing to a substantial increase in the company’s value, exceeding $240 billion since late May.
Factors behind the surge in Tesla’s stock price
Tesla’s stock rally was driven by positive developments such as partnerships with General Motors and Ford for charging infrastructure, as well as the eligibility of its Model 3 sedans for full US tax credits. The decrease in inflation data also provided relief to the market and further boosted Tesla’s stock. Investors capitalized on factors like tax credits, deals with major carmakers, and the popularity of the Cybertruck. The aggressive price cuts made all versions of the Model 3 eligible for the full purchase tax credit, making them more affordable. Tesla also struck deals with GM and Ford to expand its supercharger network. Additionally, the company’s plans to increase Cybertruck production contributed to investor optimism.
Tesla’s Winning Streak Faces Market Resistance
Nonetheless, the current favourable trend is encountering obstacles as market dynamics indicate a possible turnaround in the stock price. Tesla’s shares took a tumble of up to 1.3% on Wednesday morning, putting the brakes on their record-breaking winning streak. The 14-day relative strength index suggests that the stock has entered overbought territory, reminiscent of the fervor seen in November 2021 during the electric vehicle craze.
Analysts Highlight Tesla’s AI Valuation Beyond Automotive Metrics
Tesla is perceived as more than just an automaker, with its advancements in autonomous driving technology and potential in the AI industry. This perception has prompted investors to seek alternative justifications for Tesla’s valuation beyond traditional automotive metrics. Analysts, like Adam Jonas from Morgan Stanley, believe that Tesla’s market value is driven by its potential as an AI company, prompting investors to look beyond the conventional automotive/hardware model for valuation. He also believes that some investors may be trying to find ways to justify Tesla’s value beyond just the price of its cars. Jonas does not anticipate significant increases in Tesla’s earnings in the near future.
Tesla stock price analysis
TSLA’s stock has experienced significant gains in the past week and month, with increases of over 14.7% and 54.18% respectively. The year-to-date performance is even more remarkable, with a staggering gain of 138% following a decline of around 50% last year. This impressive performance has garnered bullish predictions from analysts, including Jennifer Liang from KGI Securities, who raised the stock’s 12-month price target to $335, indicating a potential upside of more than 34%.
Tesla’s AI Integration Drives Electric Vehicle Innovation and Production Expansion
Tesla’s integration of AI technology is integral to its electric vehicles. Utilizing machine vision cameras and sensors, Tesla’s vehicles create detailed 3D layouts of their surroundings, enabling Autopilot to make split-second decisions for partial autonomous driving. Tesla continuously collects data to enhance its full self-driving (FSD) technology over time. What sets Tesla apart is its unique position as the first automaker in over 50 years to build itself entirely for mass production. After manufacturing 1.37 million EVs in 2022, Tesla aims to produce approximately 1.8 million EVs this year. With the recent addition of gigafactories in Austin, Texas, and Berlin, Germany, Tesla is well-positioned to significantly increase its year-over-year output. In addition to its technological advancements, Tesla has a competitive edge in its supercharger network. As the infrastructure for supporting EVs continues to develop, Tesla has already deployed over 45,000 superchargers worldwide. Even established automakers in Detroit are eager to utilize Tesla’s rapid-charging network.