Tesla’s Record Run Drives Nearly $200 Billion Jump in Value

(Bloomberg) -- The clouds are finally parting for Tesla Inc. investors who stuck with the electric-vehicle maker through a rough ride. A rush of good news for the company and the return of bullish market conviction have put the stock on pace to more than double this year.

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The Elon Musk-led EV company has added more than $194 billion to its market valuation in an 11-day run, as the shares tied with their longest-ever winning streak. It is only the second time in Tesla's history that the shares have managed this feat.

Tesla has been a "wild stock" over the years, but it has only posted two other double-digit winning streaks in its history, according to Bespoke Investment Group. The first was 10 trading days ending in April 2020, while the second —and the longest one - was less than a year later, in January 2021.

Tesla shares closed up 4.1% at $244.40 Friday, bringing this year's surge to 98%. This week's 14% advance was the best since January.

Friday's sharp rally came after General Motors Co. on Thursday said it will adapt its EVs to Tesla's Superchargers, following a similar move from Ford Motor Co., and all but ensuring it will become an industry standard in the US.

"More people buying EVs (whether they be GM or Ford for that matter) increases the likelihood that they buy Teslas," RBC Capital Markets analyst Tom Narayan wrote in a note on Thursday. "A rising tide lifts all boats and if consumers see their neighbor having an EV, they are more likely to buy one themselves - and this increases the chances they buy a Tesla."

Still, this is only the latest in a string of EV and related news that have contributed to Tesla's rapid gains since late May.

Earlier this week, all of Tesla's Model 3 sedans became eligible for the full US tax credit under a new criteria set by the US Treasury Department, while Musk's social-media platform Twitter got a new chief executive officer, calming some investor angst about Musk being spread too thin among his many high-profile ventures.

And then there is the market frenzy for all things artificial intelligence that further fueled an already buoyant sentiment for technology and mega-cap stocks, and pushed the S&P 500 Index into the bull-market territory.

Though the jury is still out on whether Tesla's rich valuation allows for any further AI-related boost, or if even the self-driving tech it is building can be equated with the generative-AI trend, the stock has undoubtedly caught the fever.

In fact, ardent Tesla bull and the chief executive officer of ARK Investment Management Cathie Wood has said that the company is the biggest AI play, which will help its stock price rise to about $2,000 in 2027. Without that AI push, Wood expects the stock to be worth only about $400 by the same time.

Retail investors, among whom Tesla enjoys a cult-like following, are clearly listening.

According to data from Vanda Research, the AI-mania has helped bring mom-and-pop traders back into the game after a 3-month long lull, with an average flow $1.36 billion a day into US markets over the past week through Thursday.

"Better-than-consensus economic data and the resolution of the debt ceiling were among key macro drivers of this rebound in participation, but AI's push is what decisively boosted animal spirits in recent weeks," Vanda's Marco Iachini and Giacomo Pierantoni wrote in a note to clients.

(Updates with closing shares in first deckhead, second and fourth paragraphs. Updates chart.)