A man sits inside of a Tesla car Model 3 as a vendor talks to him at a Tesla shop inside of a shopping Mall in Beijing on May 26, 2021.
Nicolas Asfouri/AFP via Getty ImagesStock in electric-vehicle pioneer Tesla is on fire for seemingly no reason.
There haven’t been any big, splashy upgrades that can explain the recent run. Shares have jumped almost 10% for the week and are on pace for their best week since April—and, perhaps, their first double-digit weekly gain since March. Tesla stock (ticker: TSLA) was edging up about 0.3% in early trading Friday.
Investors, rightly so, are wondering what’s going on. We found four reasons, outlined below.
Taking Cues From China
Many electric-vehicle stocks have been on a winning streak lately, beyond just Tesla. Coming into the week, shares of Chinese EV maker NIO (NIO) were up 21% for the month. XPeng (XPEV) and Li Auto (LI) had gained 41% and 29%, respectively.
Tesla, on the other hand, was down for the month of June coming into this week. But China is the world’s largest market for EVs, so when things are going well there, it bodes well for Tesla. It looks like some of the Chinese EV maker stocks’ shine has finally rubbed off on Tesla.
Delivery Optimism
The second reason is about second-quarter deliveries, after perceived weakness in Chinese delivery numbers. More recently, however, several reports have been popping up about Tesla working hard to deliver vehicles into the end of this month.
“After a disaster start to the quarter for Tesla in China, the Street is reading the tea leaves as bullish for the month of June with momentum into [the second half],” Wedbush analyst Dan Ives tells Barron’s. He believes 900,000 deliveries is still possible for 2021. Wall Street is modeling about 825,000. Tesla delivered about 500,000 cars in 2020.
Green Tidal Wave
Ives has also written about a “green tidal wave” coming from the White House. President Joe Biden wants part of any infrastructure bill to include purchase incentives for EVs as well as charging infrastructure. A bill isn’t ready, but progress was made in Washington this week.
Musk Tweeting, Again
No search for the reason behind moves in Tesla stock would be complete without looking at CEO Elon Musk ‘s Twitte r (TWTR) feed. He tweeted Friday that the updated full self-driving, or FSD, software and subscription pricing could roll out in as soon as a week.
Tesla plans to offer its highest level of driver assistance, called full self-driving or FSD, on a subscription basis. It’s a new era for car companies, which don’t typically get to realize recurring revenue like software providers. Bulls have been waiting quite some time for the FSD subscription to arrive.
What’s Next
Next up for Tesla investors, after any FSD release, will be second-quarter delivery numbers and then earnings. Those data points come in July.
Year to date, Tesla stock is still down about 3%, trailing behind comparable gains of the S&P 500 and Dow Jones Industrial Average.
Write to Al Root at allen.root@dowjones.com
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June 25, 2021 at 11:37PM
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Tesla Stock Has Been on Fire This Week. Here Are 4 Reasons. - Barron's
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