Tesla Shares Have Started to Rise, Stifel is Optimistic

Tesla shares rose on Monday following a positive outlook from investment bank Stifel. Analyst Stephen Gengaro raised his price target for Tesla to $508 in a note, surpassing the previous target of $483, driven by the company's equity analysis and the strength of its Full Self-Driving (FSD) technology and robotaxi services.

Gengaro highlighted that Tesla's AI-based FSD technology and robotaxi initiatives play a critical role in the company's valuation. As an important data point, Tesla shares saw a 3% increase in early trading on Monday.

Regarding FSD, Gengaro noted that Tesla's advanced AI technology will enhance the system's decision-making processes and its 'jerky' responses. He also emphasized that it will provide benefits in tasks such as finding parking spots. The advanced Cortex AI training center at Tesla's Giga Texas will aid in the faster improvement of the FSD, and Gengaro mentioned that his experience showed 'progress' in the current version.

The analyst also expressed optimism about the development of Tesla's robotaxi service. The company is making strides in the paid services it has begun offering in the Austin and San Francisco Bay Area. Gengaro recalled that Tesla's management announced plans to expand its service area to eight to ten major cities by the end of 2025. In Austin, Tesla has expanded its coverage three times since the initial launch in June 2025 and is currently operating with a safety driver present. The robotaxi service in the Bay Area is also progressing, but safety drivers are still on duty.

One of Stifel's biggest concerns regarding Tesla is the decline in profit margins in the automotive business segment. Gengaro noted that average sales prices are expected to trend 'flat' going forward. However, he believes that the cheaper 'standard' versions of the Model Y and Model 3 electric vehicles will help mitigate the loss of electric vehicle tax credits.

This increase on Monday came after a challenging week for the stock. Tesla shares dropped 5.9% before rising on Friday. The stock fell below the $400 support level on Thursday and Friday, closing at $404.35. On Thursday, the stock reached its lowest levels since September.

The recent decline followed CEO Elon Musk's potential award of historic proportions, which could be worth approximately $1 trillion if aggressive targets are met.

Another notable development is the significant reduction of Peter Thiel's stake in Tesla, Musk's former friend and co-founder of PayPal. According to a new 13F SEC filing, Thiel's hedge fund, Thiel Macro, now holds only 65,000 shares of Tesla. He sold 207,613 shares in the third quarter, resulting in a 76% reduction in the fund's Tesla position. Thiel also completely sold around 538,000 shares of Nvidia, reinforcing market observers' belief that Thiel is retreating from AI investments.