What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ: TSLA) jumped 5.9% in the morning session after the stock extended its positive momentum on a wave of positive news including growing optimism around its autonomous driving technology.
Investor optimism was bolstered by advancements in its Full Self-Driving (FSD) technology and the expansion of its robotaxi ambitions, highlighted by official approval from the Nevada DMV to start testing autonomous vehicles on public roads. Additionally, the company launched its new Megapack 3 and Megablock energy storage systems, which promise to reduce installation times and costs. The rally was also supported by broader market strength, as Wall Street indexes reached record highs amid expectations of a Federal Reserve interest rate cut.
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What Is The Market Telling Us
Tesla’s shares are extremely volatile and have had 46 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 2.5% on the news that the company unveiled a new proposed compensation plan for CEO Elon Musk that could be worth up to $1 trillion.
The long-term performance award, which shareholders will vote on in November, is designed to keep Musk at the helm for the next decade. The plan ties his compensation to a series of ambitious goals, including increasing Tesla's market value to $8.5 trillion. To receive the full payout, which would be granted in 12 tranches, the company must also hit operational targets like delivering 20 million vehicles, producing one million robotaxis, and manufacturing one million humanoid robots. The proposal would also increase Musk's voting power within the company. Analysts view the move positively, with Wedbush noting the package is a "critical next step to keep Musk as CEO at least until 2030" during a key growth period.
Tesla is up 3.2% since the beginning of the year, but at $391.53 per share, it is still trading 18.4% below its 52-week high of $479.86 from December 2024. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $2,799.
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