Tesla’s record run boosts value by nearly $200 billion

(Bloomberg) — The clouds are finally lifting for Tesla Inc. investors who have stuck with the electric vehicle maker through a difficult journey. A flurry of good news for the company and the return of bullish conviction in the market has seen the stock more than double this year.

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The Elon Musk-led EV company added more than $194 billion to its market valuation in 11 days as the stock tied for its longest winning streak. This is only the second time in Tesla’s history that stocks have achieved this feat.

Tesla has been a “wild stock” over the years, but it has only had two other double-digit winning streaks in its history, according to Bespoke Investment Group. The first was 10 trading days ending in April 2020, while the second – and longest – was less than a year later, in January 2021.

Shares of Tesla closed 4.1% higher at $244.40 on Friday, taking this year’s gain to 98%. This week’s 14% advance was the best since January.

Friday’s strong rally came after General Motors Co. said Thursday it would adapt its electric vehicles to Tesla’s superchargers, following a similar move by Ford Motor Co., and ensure it becomes an industry standard in the United States.

“More people buying EVs (whether GM or Ford for that matter) increases the likelihood that they will buy Teslas,” RBC Capital Markets analyst Tom Narayan wrote in a note Thursday. . “A rising tide lifts all boats, and if consumers see their neighbor having an EV, they’re more likely to buy one themselves — and that increases the chance they’ll buy a Tesla.”

Still, it’s just the latest in a string of electric vehicle and related news that has contributed to Tesla’s rapid gains since late May.

Earlier this week, all of Tesla’s Model 3 sedans became eligible for the full US tax credit under new criteria set by the US Treasury Department, while Musk’s social media platform Twitter got a new chief executive, calming some investors’ angst about Musk being spread too thinly among his many high-profile ventures.

And then there’s the market frenzy for all things artificial intelligence which further stoked already buoyant sentiment for tech and mega-cap stocks, and pushed the S&P 500 Index into market territory. bullish.

While the jury is still out on whether Tesla’s rich valuation allows for a new AI-related push, or if even the self-driving technology it’s building can equate to the generative AI trend, the headline undoubtedly caught a fever.

In fact, Tesla’s fiery bull and ARK Investment Management’s managing director, Cathie Wood, said the company is the biggest AI game, which will help its stock price hit around $2,000. in 2027. Without this AI push, Wood expects the stock would only be worth around $400 at one time.

Retail investors, among whom Tesla enjoys a cult following, are clearly listening.

According to data from Vanda Research, AI-mania has helped bring mom-and-pop traders back into the game after a long 3-month lull, with an average daily flow of $1.36 billion into the markets Americans from last week to Thursday.

“Better-than-consensus economic data and the resolution of the debt ceiling were among the key macro drivers of this rebound in participation, but the AI ​​push is what has decisively boosted animal spirits in recent years. weeks,” Vanda’s Marco Iachini and Giacomo Pierantoni wrote in a note. to customers.

(Updates with closing actions in first bridgehead, second and fourth paragraphs. Table of updates.)

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