Tesla’s Stock Surges as the Electric Vehicle Manufacturer Launches Highly Anticipated Free Trial

Tesla’s Stock Surges as the Electric Vehicle Manufacturer Launches Highly Anticipated Free Trial

Tesla

stock jumped Tuesday, as investors have become inured to Wall Street estimates and price target cuts. Instead, they’re focusing on the potential for Telsa’s self-driving software.

Shares of the electric-vehicle maker were up 5.3% in early trading at $181.73, while the


S&P 500

and


Nasdaq Composite

were up 0.3% and 0.5%, respectively.

The jump came despite two bears cutting estimates.

Bernstein analyst Toni Sacconaghi lowered his price target on

Tesla

stock to $120 a share from $150. He kept his Sell rating on the stock.

Along with the target price reduction, Sacconaghi cut his first-quarter delivery estimates to 426,000 units from 490,000 units. His 2024 full-year delivery estimate was reduced to 2 million units from 2.1 million units.

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GLJ Research analyst Gordon Johnson cut his first-quarter delivery estimates to 406,000 units from 417,500 units. He rates shares Sell, too. His target price is a Street-low $23.53 a share.

Tesla delivered about 423,000 units in the first quarter of 2023. The new numbers imply little or no growth. Still, investors are used to the estimate cuts. Tesla stock has been downgraded several times in recent weeks and current first-quarter delivery estimates average about 430,000 units, down about 30,000 from a few months ago.

All of that relatively bad news seems to be reflected in Tesla stock. Coming into Tuesday trading, Tesla shares have fallen 31% this year.

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Investors were focusing on something else on Tuesday. It looks to be Tesla’s autonomous-driving software called Full Self Driving, or FSD.

CEO Elon Musk tweeted Monday night that FSD would be offered to customers as a free one-month trial. The goal is likely to demonstrate system improvements to Tesla drivers.

Tesla didn’t respond to a request for comment about the promotion.

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Tesla’s FSD is its highest-level autonomous driving software, capable of doing most driving tasks most of the time.

The system still requires driver supervision 100% of the time. Tesla vehicles—like all other mass-market passenger vehicles—do not yet truly drive themselves.

Tesla makes regular updates to the FSD software and recently started rolling out what it calls version 12. Musk, apparently, wants to get the new version into the hands of drivers.

FSD can be purchased for a one-time fee of $12,000 or by paying $199 a month. Numbers are tough to come by, but Tesla has an estimated 400,000 FSD subscribers. At the monthly rate, that makes FSD a billion-dollar-a-year business.

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Future Fund Active ETF

cofounder and Tesla shareholder Gary Black wants Tesla to break out FSD revenue so investors can see how big it is and how sales are growing. The company isn’t ready to do that yet, according to Black.

Wider spread adoption of FSD by owners of the 5 million to 6 million Tesla cars on roads worldwide could push the company in that direction.

Shares of Tesla peers also were moving.

NIO

fell 2.3% and

Lucid

stock dropped 2.9%.

Rivian

shares gained 0.7%.

Ford Motor

stock was down 0.5% while

General Motors

shares gained 0.3%

Write to Brian Swint at brian.swint@barrons.com

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