The stock market extended its rally. All three major U.S. indexes went up slightly on Monday, with surprise-surprise Tesla shares soaring and having their best day since March 2021
Tesla really revved up on Monday, boosting its valuation by more than 15%. What caused this surge in Tesla stock after it's been a bit of a disappointment lately?
Shares of Tesla surged after the electric vehicle maker's CEO, Elon Musk, made a surprise trip to Beijing over the weekend and reportedly got tentative approval for its driver-assistance software.
Musk met with a top government official in the Chinese capital on Sunday. According to sources familiar with the matter, as reported by The Wall Street Journal, Chinese officials informed Tesla that Beijing has tentatively greenlit the automaker's plan to introduce its "Full Self-Driving," or FSD, software feature in the country.
This news gave Tesla stock a huge boost after weaker demand had caused its shares to plummet over the past few months, making it the worst performer on the S&P 500 index.
Meanwhile, short sellers took a big hit, losing nearly $5.5 billion over the last four trading days while Tesla's stock price shot up by 27%. On Monday alone, Tesla's gains snatched almost $3 billion from the pockets of the pessimistic short sellers.
There's still no launch date for the Full Self-Driving car. However, according to Tesla's website, it's now labeled as "coming soon". The hope is that this will not only boost the company's share price in the short term but also in the long term by driving more sales.
Tesla's sales in China have been struggling for the past few years due to stiff competition from other EV manufacturers offering their vehicles at much lower prices. To catch up, Tesla has slashed prices for its models. However, this move has resulted in a combination of decreased demand at lower prices, making investors wary of picking up the stock.
Recent news could spark another round of upward momentum for the stock. The “Full Self-Driving” vehicle could be a game-changer. With shares up 37% since earnings, investors eyeing Tesla stock might see this as the opportune moment to get back in.
