After a rough start to 2024, Tesla (NASDAQ: TSLA) is starting to see some positive movement. In the last five trading sessions alone, TSLA stock has surged by 35%, jumping from $142 to $194 at the latest close.
The unexpected surge has taken many investors off guard, causing short-sellers to lose more than $5.5 billion on their bets. Initially, they anticipated TSLA shares would continue declining after earnings due to Tesla falling short of analyst expectations.
Yet, investing in Tesla at this juncture may still hold potential. The crucial question remains: Should you?
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What caused the surge in TSLA stock?
Investors are responding to reports indicating that Musk’s trip led to approval for Tesla to introduce its Full Self-Driving (FSD) software in China and to transfer data overseas. This marks a significant milestone for the American company as it vies with Chinese EV manufacturers in the world’s largest automotive market.
However, Tesla’s triumph lies in how it can leverage the advancement of its technology in other countries where it operates. The recent surge in stock price appears to anticipate these future potential developments. Nevertheless, this approval signifies a step forward for Tesla, prompting positive reactions from investors.
Analysts weigh in on the FSD prospect for Tesla
After the report that Tesla will start utilizing FSD in China, many analysts weighed in on the prospect and what it means for Tesla as it seeks to capture a higher market share in China.
Goldman Sachs analysts noted that historically, Tesla has focused its Full Self-Driving (FSD) research and development efforts on North America. While they acknowledge the potential global applicability of Tesla’s engineering work, they emphasize the necessity of local adjustments for the product to succeed elsewhere. They also highlight the complexities Tesla may face regarding government regulations on data access, localization, and AI, which could complicate technology sharing within and outside China.
Conversely, Citi analysts view the tentative approval of FSD in China as a positive development for Tesla, potentially bolstering its competitive position in the world’s largest auto market. They see it as a welcomed development amidst recent challenges Tesla has encountered in China. However, they express uncertainty about the impact on future demand given the presence of competing L2+ systems in China and the conditions that must be met before FSD deployment.
While analysts are conflicted about the FSD introduction in China, Tesla stock continues to surge. However, whether this surge is short-lived or not depends on multiple factors, many of which don’t work in Tesla’s favor.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
