Tesla Inc. (NASDAQ: TSLA) saw a sharp recovery on Tuesday following its worst single-day decline in five years. The rebound came as CEO Elon Musk announced an ambitious plan to double US production over the next two years. His statement was made during an event at the White House, where former President Donald Trump publicly endorsed Tesla by declaring his intent to purchase a Tesla EV. The endorsement, coupled with Musk’s commitment to ramping up domestic production, boosted investor confidence, sending Tesla shares up 3.8% for the session.
Tesla’s Market Performance and Recovery
Tesla’s stock, which had faced a steep decline of nearly 50% from its December 2024 high, experienced a much-needed rebound following the White House event. Closing at $230.58, up 3.79%, Tesla regained some lost ground amid broader concerns over declining sales and brand perception. Despite an after-hours dip of 0.79%, the announcement of increased US manufacturing helped stabilize investor sentiment.
Trump’s Endorsement and Its Market Impact
Trump’s statement calling Tesla a “great company” and his publicized Tesla purchase injected optimism into the stock. His administration’s tariff policies, aimed at bolstering US manufacturing, could provide Tesla with an edge in reducing reliance on international supply chains. The move mirrors recent reports of Honda shifting next-generation Civic production to the US in response to tariff adjustments. These geopolitical and economic strategies have significant implications for Tesla’s production costs and long-term growth.
Wall Street’s Take: A Buying Opportunity?
Morgan Stanley’s top analyst, Adam Jonas, reaffirmed Tesla as a long-term AI-driven growth stock. Despite Tesla’s 50% drop from its peak, Jonas sees this as a prime buying opportunity, describing Tesla as an “embodied AI compounder.” He noted that the Tesla narrative shifts with share price movements—when the stock is high, focus is on AI and autonomy, but when it declines, attention turns to sales weakness and Musk’s external distractions.
Jonas predicts Tesla’s next year will be highly volatile, with a bear case of $200 and a bull case of $800. He highlighted upcoming catalysts, such as Tesla’s robotaxi unveil in Austin, regulatory updates on autonomous vehicles, and technological advancements, including progress on the Optimus robot. Morgan Stanley has a “Top Pick” rating on Tesla with a $430 price target.
Elon Musk’s Balancing Act
Musk, who has been involved in government initiatives such as the controversial DOGE program, admitted that his expanding responsibilities are straining his leadership across Tesla, SpaceX, and xAI. In an interview with Fox Business, he acknowledged the difficulties of balancing governmental duties with his business empire but remained confident in Tesla’s direction.
Tesla’s Brand Sentiment and Future Outlook
Despite the stock’s recovery, Tesla faces challenges, including declining sales in Europe and China, increased protests at US showrooms, and negative sentiment among some current Tesla owners. Musk’s involvement in political discussions has also drawn mixed reactions, further influencing brand perception.
Tesla’s future remains uncertain, but with strong institutional backing, an increased focus on US manufacturing, and potential AI breakthroughs, the automaker is positioned for a dynamic year ahead. Investors will be closely watching Tesla’s next moves, particularly in the AI and autonomous vehicle sectors, as it navigates evolving market conditions.
