This year started off as a particularly difficult year. tesla Investors are truly in a frenzy.
Tesla shares plunged 36% in the first quarter, the worst period since 2022, but have since rebounded fully, rising 3.1% on Tuesday to a record closing price of $489.88. This is an increase of 21% for the year.
The previous intraday high was $488.54 almost exactly one year ago, and the previous high close was $479.86.
Stocks were ignited this week when CEO Elon Musk, the world’s richest man, said Tesla was testing driverless cars without passengers in Austin, Texas, about six months after starting a test program with a safety driver.
The increase boosted Tesla’s market capitalization to $1.63 trillion, making it the seventh most valuable publicly traded company. Nvidia, apple, alphabet, microsoft, Amazon and metaand a little before that broadcom. According to Forbes magazine, Musk’s net worth is currently around $684 billion, more than $430 billion more than Google co-founder Larry Page, who ranks second on the list.
Bullish investors see the news as a sign that the company is finally fulfilling its long-held promise to turn existing electric vehicles into robotaxis with a software update.
Tesla’s self-driving system being tested in Austin has not yet been widely adopted, and many safety-related questions remain.
It’s been a roller coaster year for Tesla, but the company enters the year in a seemingly favorable position thanks to Musk’s role in President Donald Trump’s White House as head of the Department of Government Efficiency (DOGE), which aims to significantly downsize the federal government and reduce federal regulations.
But Mr. Musk’s collaboration with Mr. Trump, support for far-right politicians around the world, and inflammatory political rhetoric has sparked a consumer backlash that continues to weigh on Tesla’s brand reputation and sales.
Tesla reported a 13% drop in deliveries and a 20% drop in auto revenue in the first quarter. Although stock prices rose in the second quarter, sales continued to decline, with auto revenue down 16%.
The second half of this year was even better. Tesla reported in October that third-quarter sales rose 12% as U.S. buyers rushed to purchase EVs and take advantage of federal tax credits that expired at the end of September. The stock price rose 40% during the same period.
Business challenges remain due to the loss of tax credits, continued backlash against Mr. Musk, and intense competition from cheaper or more attractive EVs made by companies such as China’s BYD and Xiaomi and Europe’s Volkswagen.
Tesla launched more affordable versions of its popular Model Y SUV and Model 3 sedan in October, but so far they have not affected sales in the U.S. or Europe. In the U.S., new stripped-down options appear to be cannibalizing sales of Tesla’s higher-priced models. Tesla’s U.S. sales fell to a four-year low in November, according to Cox Automotive.
Despite the challenging environment for the U.S. EV maker, Mizuho this week raised its price target on Tesla from $475 to $530 and maintained a buy recommendation on the stock. The company’s analysts wrote that reported improvements to Tesla’s FSD (Full Self-Driving (Supervised)) technology “could support accelerated expansion and potentially an early retirement of chaperones” for the company’s “San Francisco and Austin robotaxi fleets.”
Tesla operates a robotaxi-branded ride-hailing service in Texas and California, but currently the vehicles are accompanied by either a driver or a human safety observer.
Attention: Why speed alone doesn’t sell EVs
