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Why Shares of Tesla Are Soaring Today
Key Points
There is no company-specific reason behind the move today.
In fact, I see more bad news out there than good news for Tesla today.
Shares of Tesla (NASDAQ: TSLA) traded roughly 5.2% higher, as of 1 p.m. ET today. There is no obvious reason for the move, although as one of the largest stocks in the market, Tesla appears to be joining in the strong market rally today.
Market enthusiasm
Federal Reserve Chair Jerome Powell ignited a furious rally in the stock market after he hinted about a potential interest rate cut at the Fed's upcoming meeting in September, during a speech made at the Fed's 2025 Jackson Hole Economic Policy Symposium this morning. Lower rates are often viewed as a positive catalyst for stocks.
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Otherwise, I don't see any significant good news regarding Tesla today. In fact, I see more negative news. Yesterday, media outlets reported that the National Highway Traffic Safety Administration (NHTSA) is investigating Tesla over the way the company reports accidents with its vehicles. The NHTSA said on its website they had "identified numerous incident reports" regarding Tesla crashes, which "occurred several months or more before the dates of the reports [to NHTSA]."
Tesla said the issue has to do with the way it was collecting data, and that issue has now been corrected. Still, the investigation comes at a bad time, as Tesla ramps up its autonomous robotaxi fleet, and tries to prove that its full self-driving (FSD) technology not only works, but can scale into a massive new business for the company.
Still overvalued
Given that Tesla seems to be moving in lockstep with the market today, I still view the stock as overvalued, while it trades at close to 200 times forward earnings. Investors, in my view, are baking too much success into future initiatives like robotaxis and humanoid robots that have yet to fully play out, which therefore leaves the stock vulnerable to pullbacks.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
