Tesla (NASDAQ:TSLA) stock surged as much as 7.5% this morning, but by the closing bell nearly half those gains were gone. The shares still finished the day up 3.5%, yet the swing told a story of both enthusiasm and caution, as traders tried to balance Elon Musk’s surprise insider purchase with lingering questions about Tesla’s fundamentals.
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The frenzy began when investors learned Musk had scooped up nearly $1 billion worth of Tesla stock, his first personal buy since 2020. To many, it was the ultimate show of confidence from Tesla’s CEO, a clear message that he believes in the company’s trajectory despite the noise around slowing EV demand and profitability pressures.
But by midday, the initial wave of buying had collided with profit-taking from traders eager to lock in quick gains. At the same time, old worries resurfaced – chief among them the fact that Tesla’s margins are expected to take a hit as environmental tax credits roll off in the second half of the year. Those credits have been a meaningful boost to Tesla’s bottom line, and their disappearance leaves the company more exposed to cost pressures in a competitive EV landscape.
William Blair analyst Jed Dorsheimer summed up the push and pull in his research note today, noting: “We see this as a clear signal of confidence from Musk.”
Still, Dorsheimer didn’t budge from his Market Perform (i.e., Neutral) rating, even as he admitted to becoming more bullish following the purchase. His hesitation reflects the fine line between recognizing Musk’s confidence and acknowledging that Tesla’s valuation already prices in a lot of future success. (To watch Dorsheimer’s track record, click here)
That’s where the debate shifts to Tesla’s biggest swing factor. Autonomy, and especially robotaxis, remain the wildcard that keeps many investors dreaming. Tesla recently opened its service to the public, and the app quickly climbed to the top of the download charts. Musk insists the latest software update will be two to three times safer than a human driver, a claim that, if true, could transform the company’s prospects. Dorsheimer points out that Tesla’s controversial decision to rebuild its autonomy stack around vision-only neural nets is starting to pay off, with rapid expansion in coverage that rivals took years to achieve.
Even so, Wall Street remains split. Some see Musk’s bold bet on autonomy as the next big growth engine, while others lean toward the sidelines, wary of execution risks and valuation. That divide is reflected in consensus: TipRanks’ database shows TSLA rated as a Hold, with a 12-month average price target of $313.62, implying ~23% downside from current levels. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.