Tesla stock hits 7-month high as all Model 3s qualify for full tax credit

Tesla shares jumped to a seven-month high Wednesday, riding on the insatiable investor appetite for mega-cap tech stocks and a string of recent positive news. 

The electric-vehicle maker’s stock climbed as much as 4.3% to $230.83 in New York, on pace to record its ninth straight day of gains and the longest winning streak since January 2021. Tesla shares are up 87% this year despite some recent declines, as they rebound from last year’s 65% plunge.

The brisk run has been fueled by a rush for technology and growth stocks in recent days, amid ebbing fears about a recession. 

“Some of this move in Tesla is absolutely warranted as we are coming out of a downturn that was comparable to the dot-com bubble, so there is still upside in many tech stocks just based on how hard they got hit,” Ivana Delevska, chief investment officer at SPEAR Invest, said in an interview. 

On Tuesday, all of Tesla’s Model 3 sedans became eligible for the full U.S. tax credit under a new criteria set by the Treasury Department. The new qualification can help allay rising concerns that demand for the company’s cars, and electric vehicles overall, were slowing. And last week, it announced a deal to provide Ford EVs access to Tesla Superchargers, a move that opens Tesla to government funds promoting charging infrastructure.

After staging a sharp rally early this year, Tesla shares had been in rough waters over the past few months. The company’s decision to aggressively cut prices to address waning demand led to further worries that margins were thinning. 

Meanwhile, a new chief executive officer for social-media platform Twitter can also help calm investors who were nervous about Tesla CEO Elon Musk being spread too thin among his many high-profile ventures.   

While investor frenzy for anything tied to artificial intelligence has given shares a lift, some warn that trading Tesla as an AI play may not end well for investors.

Last week, Morgan Stanley said that despite the hype, it remains an auto company and the stock’s direction will be dominated by the supply and demand of electric cars over the next 12 months.

“I would caution investors that are investing in Tesla for AI as the jury is still out on Tesla’s positioning,” Delevska said, echoing the skepticism. “We believe that generative AI is disrupting Tesla’s first mover advantage in autonomous driving.”