As The Market Digests Tesla's Valuation, Its Powerful Momentum Continues To Drive The Narrative

Tesla Inc TSLA shares are trading higher Friday, as investors digest a flurry of conflicting reports, ultimately focusing on the long-term picture for the electric vehicle maker. Here’s what investors need to know.

What To Know: The primary driver appears to be continued optimism surrounding the board’s approval of a new compensation package for CEO Elon Musk, valued at approximately $29 billion.

Analysts at Wedbush and Future Fund have called the move favorable, suggesting it solidifies Musk’s leadership until at least 2030 and removes the “overhang” from the previous Delaware court dispute. Wedbush reiterated its Outperform rating with a $500 price target, emphasizing Musk’s importance to the company’s future in AI and robotics.

This investor confidence comes despite notable headwinds. The company is scrapping its in-house Dojo Supercomputer AI team, with its leader and other key talent departing. Tesla will now pivot to outsourcing its AI chip needs, underscored by a recent deal with Samsung worth over $16.5 billion for next-generation self-driving chips.

The move follows reports of weakening sales figures. In China, weekly new insurance registrations for the last week of July were down 12% year-over-year. Sales have also experienced sharp declines in markets like California, which saw a 21% fall, and have been dwindling in parts of Europe.

However, offsetting these concerns is news of Tesla’s dominance in the secondary market. Used-car retailer Carvana reported that Tesla models were its top three best-selling used electric vehicles in the second quarter. This robust demand for pre-owned Teslas highlights the brand’s enduring strength.

Investors on Friday seem to be prioritizing the strategic clarity from Musk’s solidified role and the major Samsung partnership over the immediate-term sales softness and the internal restructuring of its AI program.

Benzinga Edge Rankings: Based on the Benzinga Edge data, TSLA demonstrates very strong Momentum and Quality, with high scores of 80.99 and 76.39, respectively. The stock also shows solid Growth potential with a score of 68.36.

However, it scores extremely poorly on Value at just 9.79, indicating that the stock may be considered significantly overvalued relative to its fundamental financial metrics.

This is further reflected in its price trend, which is currently negative in the short term, but remains positive over the medium and long term.

Price Action: According to data from Benzinga Pro, TSLA shares are trading higher by 2.7% to $333.94 Friday morning. The stock has a 52-week high of $488.54 and a 52-week low of $194.68.

Read Also: Uber May Sell Stake To Fund Robotaxis, Says CEO Dara Khosrowshahi As Tesla’s Own Self-Driving Pilot Gains Ground

How To Buy TSLA Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in Tesla’s case, it is in the Consumer Discretionary sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

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