Tesla shares rose 4.59% in early trading Friday, buoyed by renewed optimism among investors despite lingering concerns about weak sales, expensive valuations, and Chief Executive Elon Musk’s strategic pivot toward robotics and artificial intelligence.
The Tesla stock has struggled this year amid an absence of new vehicle launches and growing investor unease over Musk’s political positions.
However, a sudden rally this week suggests traders may be driving momentum in the near term.
Musk shifts focus to Robotics
Musk has signalled a long-term shift for Tesla away from its core electric vehicle business.
On his social media platform X earlier this month, he claimed “80% of Tesla’s value will be Optimus,” referencing the company’s humanoid robot initiative.
Morgan Stanley analyst and long-time Tesla bull Adam Jonas said CEO Elon Musk’s proposed $1 trillion compensation package represents a positive development for shareholders.
In a note to investors, Jonas described the plan as “a good deal” for Tesla investors.
Jonas acknowledged the size of the figure but argued it is small relative to Tesla’s long-term market opportunity.
He highlighted the potential of humanoid robots, suggesting the market could surpass the global labour industry “by a significant multiple.”
He added that “contemplating future global GDP before AI robots is like contemplating global GDP before electricity.”
Despite that vision, Tesla faces near-term headwinds.
Its 2025 earnings are projected to fall nearly 30 percent, while its robotaxi business remains years from profitability and faces competition from Alphabet’s Waymo and other players.
The broader EV market slowdown, which began in 2023 and worsened in 2024, has added pressure.
At the same time, Tesla’s stock valuation remains stretched: shares are trading at roughly 155 times forecast earnings for the next 12 months, close to levels seen during the 2021 tech boom when Tesla first crossed a $1 trillion market capitalisation.
Analysts divided on the Tesla stock
TD Cowen reaffirmed its Buy rating on Tesla with a price target of $374.
The brokerage said its recent call with Tesla’s Special Committee reinforced its confidence in the company’s long-term trajectory.
According to TD Cowen, Tesla’s four Product Goals outlined in its proxy statement align with key strategic milestones.
The firm estimates that reaching these goals could correspond with the company achieving its first two EBITDA milestones of $50 billion and $80 billion by around 2030.
It added that the longer-term targets, up to $400 billion in EBITDA, reflect Tesla’s scalability ambitions.
Earlier in the week, Wells Fargo, however, maintained an Underweight rating on Tesla with a $120 price target.
Analyst Colin Langan said August sales data highlighted ongoing weakness, even as month-on-month volumes improved.
The bank reported that deliveries across three major markets it tracks were down 9 percent year-over-year but up 37 percent from July.
Despite the sequential rebound, Wells Fargo warned that Tesla’s third-quarter deliveries could still fall short of consensus expectations.
The post Why Tesla stock is surging over 4% on Friday appeared first on Invezz
