Tesla stock made a decisive move above a key resistance level with the EV giant winning tentative approval for introducing Full Self-Driving (FSD) in China after Chief Executive Elon Musk made a surprise visit to the country over the weekend. TSLA shares surged Monday but fell early Tuesday.
Wedbush Securities analyst Dan Ives, a longtime Tesla bull, wrote Monday that Musk's visit to China was a "home run." Ives added that the Tesla chief's ability to win FSD approval in China is a "watershed moment for the Tesla story." The Wedbush analyst has a 275 price target and an outperform rating on Tesla stock.
Tesla will team up with Baidu, which will provide access to its mapping data and provide its lane-level navigation service for FSD, which isn't capable of self-driving.
Meanwhile, Adam Jonas, Morgan Stanley's high-profile autos analyst and a Tesla bull, proclaimed Monday that it is clear Musk is fully focused on the Tesla business.
"Elon Musk's visit to China means far more than seeking approval for self driving tech on Chinese roads," Jonas wrote Monday. "Whether Tesla's CEO is sleeping on a floor or on a plane ... the message is clear: He's back."
On Tuesday, Tesla stock fell 2.6% to 189.10 after jumping 15.3% during market action Monday. Since Tesla reported first-quarter earnings and revenue last Tuesday, TSLA shares have now gained more than 30%.
"While demand challenges exist in China for Tesla, the Street is looking through this painful transition period for the long term growth story to emerge for Musk & Co. with FSD a key ingredient in that recipe for success," Ives added Monday.
Tesla Stock: Musk Is All In On AI
Musk and Tesla have been stepping up rhetoric about full self-driving and AI in recent weeks. That messaging was on full display during last week's first-quarter earnings call. The company announced free cash flow went negative to the tune of $2.5 billion in Q1, as Tesla spent $1 billion on "AI infrastructure" with plans to unveil its robotaxi on Aug. 8.
On Sunday, Musk posted on X, formerly Twitter, that Tesla will spend around $10 billion in 2024 in "combined training and inference AI, the latter being primarily in car."
"Any company not spending at this level, and doing so efficiently, cannot compete," Musk said.
Cathie Wood Boosts Tesla's AI Focus
Musk also endorsed over the weekend comments by Cathie Wood via X, stating that Tesla is the "biggest AI project on Earth."
Wood responded to Musk Sunday, writing that she and her Ark Invest funds view that Tesla's AI investments are "separating it from the auto and tech packs."
Wood has long been bullish on Tesla, believing in the long-term value of full self-driving and robotaxi technology. Cathie Wood poured money into Tesla as it hovered around 52-week lows in the run-up to Q1 earnings. Wood tends to load up on Tesla stock as it dips to lows.
The Wall Street Journal reported in early April that investors have pulled more than $2 billion in 2024 from Ark funds. Wood's ARK Innovation ETF has underperformed the S&P 500 for the past two years. Tesla stock is the top hold in ARKK, with a weight of 10.95% as of April 29.
"Investors have piled into cash-rich megacap innovation stocks, a crowded trade, and are neglecting pure plays in disruptive innovation that are not in the broad based benchmarks," Wood wrote Sunday on X. "We believe this crowded trade will lead to subpar returns relative to those from small to large cap stocks that are not in the broad based benchmarks."
Tesla Stock Performance
Last week, Tesla stock advanced 14.4% after hitting a 52-week low of 138.80 on April 22. The stock started Monday down more than 4% on the month but is now up 10.3% in April.
After rallying following Q1 earnings, Tesla stock on Monday advanced past resistance at its 10-week moving average, according to MarketSurge analysis.
Tesla has struggled to retake this level for much of 2024. Breaking decisively above resistance could be a positive signal. If Tesla stock fails to reclaim its 10-week line, that declining marker could continue to act as a ceiling to the stock price.
Tesla stock ranks eighth in the 35-member IBD Auto Manufacturers industry group. The stock has a 43 Composite Rating out of a best-possible 99. Tesla stock also has a 35 Relative Strength Rating and a 63 EPS Rating.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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