Easing inflation and strong China demand fueled a rally, though Wells Fargo warned Q3 deliveries could still fall short of expectations.
Tesla shares climbed over 6% to $368.81 on Thursday, closing at their highest level since February as easing inflation and renewed optimism around electric-vehicle demand sent investors piling back in, even with questions lingering about the company’s delivery outlook.
A Market-Driven Rally
Much of the momentum came from the broader market. Inflation data released Thursday was in line with expectations, strengthening the view that interest rate cuts are on the horizon.
That is good news for carmakers like Tesla, since auto purchases typically rely on financing. The S&P 500 added 0.9% and the Dow Jones Industrial Average gained 1.4%, helping lift Tesla alongside.
The rally highlighted Tesla’s unique position as the priciest stock among the “Magnificent Seven.” It trades at nearly 140 times projected 2026 earnings, far above the group’s average of about 29 times. That premium has long made Tesla one of Wall Street’s most divisive names, with analyst price targets stretching across nearly a 100% range, according to a Barron’s report.
Short Sellers Stay Put
Tesla’s high valuation has also kept short sellers interested. Baird analyst Ben Kallo noted this week that around 80 million Tesla shares are sold short, equal to about 3% of its tradable stock.
That is higher than the roughly 1% seen across other big-tech peers, though the figure has not meaningfully changed in recent months.
Autonomous Driving Push
Tesla is also expanding its presence in autonomous driving. On Thursday, it secured a Nevada permit to test driverless Model Y SUVs on public streets, expanding on pilot robotaxi rides it has been offering in Austin, Texas, according to a post on X by Tesla investor and influencer Sawyer Merritt.
Musk has promised that ride-hailing could reach half the U.S. population by year-end if regulators approve. Nevada officials confirmed testing is approved, but emphasized that Tesla still needs additional clearance before operating a full commercial service.
China Sales Heat Up
China, Tesla’s most competitive market, also brought encouraging news. The six-seater Model Y L has sold out, with deliveries now pushed back to November after reportedly racking up more than 120,000 orders, Teslarati reported.
At the same time, Tesla trimmed the price of its Model 3 Long Range sedan by 3.7% as rivals like Xpeng turned up the pressure with cheaper offerings. Even with pricing cuts, Tesla’s insured registrations in China rose 41% last quarter, suggesting buyers are returning, a company investor said in a post on X.
Wall Street View
However, not everyone is convinced Tesla’s momentum will last. Wells Fargo analyst Colin Langan said Tesla’s August deliveries across three major markets fell 9% year-over-year, even though they climbed 37% from July.
The rebound may not be enough to prevent third-quarter numbers from falling short of expectations, he warned. Wells kept an ‘Underweight’ rating on the stock, with a price target of $120, implying a downside of about 67% from the last close.
On Stocktwits, retail sentiment was ‘bullish’ amid ‘high’ message volume, placing it among the top three stocks trending on the platform.
Tesla’s stock has declined 8.7% so far in 2025.
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