Tesla stock hits record as Wall Street rallies around robotaxi hype despite slow EV sales

Tesla investors are experiencing a remarkable turnaround after what began as a challenging year. Following a staggering 36% decline in the first quarter—the company's worst performance since 2022—Tesla's stock has rebounded to an unprecedented high of $489.48. This surpasses the previous intraday peak of $488.54 set nearly a year ago. The surge in stock value was fueled by comments from CEO Elon Musk, who revealed that Tesla is experimenting with driverless vehicles in Austin, Texas, without any passengers onboard. This announcement comes almost six months after the company initiated a pilot program involving safety drivers. As a result of this rally, Tesla's market capitalization reached $1.63 trillion, positioning it as the seventh most valuable publicly traded company, just behind tech giants like Nvidia, Apple, and Microsoft. Musk's wealth has also seen a significant increase, now estimated at approximately $683 billion, placing him more than $400 billion ahead of Google co-founder Larry Page. Investors are optimistic that these developments could signify Tesla's long-awaited transition to transforming its electric vehicles into robotaxis through a software update. However, the automated driving systems currently being tested have yet to be made widely available, and concerns regarding safety remain prevalent. This year has been tumultuous for Tesla, which, despite entering 2023 with promising prospects linked to Musk's influence during the Trump administration, has faced backlash due to Musk's political affiliations and controversial statements, affecting the company's brand image and sales. In the first quarter, Tesla experienced a 13% drop in deliveries and a 20% decline in automotive revenue. While the stock rebounded in the second quarter, sales continued to falter, with auto revenue down 16%. Nonetheless, the latter half of the year has shown improvement, with October seeing a 12% increase in third-quarter revenue as U.S. consumers rushed to purchase EVs before a federal tax credit expired. Despite the stock's impressive 40% gain during this period, challenges persist, including the loss of the tax credit, ongoing criticism of Musk, and stiff competition from more affordable or attractive electric vehicles from brands like BYD, Xiaomi, and Volkswagen. Although Tesla introduced more budget-friendly versions of its popular Model Y and Model 3 in October, these models have yet to significantly boost sales in the U.S. and Europe. In fact, there are indications that these lower-priced options are undermining sales of Tesla's higher-end models, with U.S. sales dipping to a four-year low in November according to Cox Automotive. In light of the challenging market conditions for EV manufacturers in the United States, Mizuho has raised its price target for Tesla from $475 to $530, maintaining its buy recommendation. Analysts noted that advancements in Tesla's Full Self-Driving technology could pave the way for an accelerated growth of its robotaxi fleet in cities like Austin and San Francisco, potentially reducing the need for human supervisors in the near future.