Tesla (TSLA) shares rallied sharply on Monday, climbing more than 5% to reclaim the $400 level, as investors cheered a rebound in China sales and a key analyst upgrade. The stock traded at $411.66 by mid-afternoon, up $20.66, after hitting an intraday high of $412.84. The gain outpaced the broader Nasdaq Composite, which rose 1.3%, as bargain hunters stepped in following last week's tech selloff.
China Sales Beat Lifts Sentiment
The catalyst came from China, where Tesla's retail sales jumped 22.5% year-over-year in May to 47,281 units, ending a two-month decline, according to data from the China Passenger Car Association. Exports from the Shanghai factory surged 68% to 38,701 vehicles, bringing total volume to 85,982. This performance stood out against a backdrop of a slumping Chinese auto market, where passenger-car sales fell 22.3% in May, marking the eighth consecutive monthly decline. New-energy vehicle sales, including battery EVs and plug-in hybrids, dropped 7.5% from a year ago but still accounted for over 62% of total sales.
While Tesla outperformed many rivals, foreign players like Volkswagen continued to struggle, and Chinese brands such as BYD remained competitive. Eugene Hsiao, head of China equity strategy at Macquarie Capital, noted that China's auto sector is “already at a mature stage of development,” with retail growth expected to stay in the single digits over the next five to ten years.
J.P. Morgan Upgrade Fuels Optimism
Adding to the positive momentum, J.P. Morgan analysts led by Rajat Gupta upgraded Tesla from “underweight” to “neutral” on Friday, raising the price target to $475 from $145. The bank argued that Tesla's valuation is increasingly tied to autonomous driving, robotaxis, humanoid robots, and software, rather than near-term car earnings. The analysts wrote that the company's hardware-software mix is “still somewhat under-appreciated and misunderstood.”
Tesla recently announced plans to launch unsupervised robotaxi service in the Austin metro area, part of a growing driverless ride-hailing push. The company reportedly has about 50 vehicles operating, still well below Alphabet's Waymo, which has more than 250 vehicles in Austin.
SpaceX IPO Demand Adds to Musk Momentum
In a related development, Elon Musk's SpaceX reportedly attracted around $150 billion in investor demand for its planned $75 billion IPO, according to Reuters. The offering, which would put SpaceX shares in public hands for the first time, is set to test appetite for high-growth stocks as Tesla continues to trade on expectations from newer business lines.
Caution Amidst the Rally
Despite the strong gains, Tesla's valuation remains stretched. The stock trades at a price-to-earnings ratio of about 378, leaving little room for error if China demand falters, robotaxi approvals stall, or money flows out of expensive tech names. The rally Monday was not just a market rebound; Tesla's performance significantly outpaced the QQQ ETF, which tracks large Nasdaq growth names and was up about 1.9% in afternoon trading. This suggests investors are pricing in sustained optimism around China, autonomy, and Musk's broader technology push.
