Tesla’s Comeback Roars: Can the Stock Sustain Its Surge?

Tesla (TSLA) investors are buzzing this week as the electric vehicle giant’s stock hit its highest levels since February 2025, marking its third consecutive week of gains. But here’s the catch: this isn’t just a fleeting rally—it’s a battle between hope and reality in a market that’s been anything but kind to Tesla’s valuation. Let’s dive into the numbers and figure out whether this surge is a sign of a true turnaround or another roller-coaster ride.

The Numbers: A Volatile Climb

Tesla’s stock closed at $280.26 on May 10, 2025—up nearly 12% from its 52-week low of $138.80 in early 2025. But here’s the kicker: this recent high still lags far behind its December 2024 peak of $479.86. Meanwhile, the stock’s February 2025 high of $394.00 (reached on February 4) now looms as a critical resistance level.

The May 10 close also highlighted Tesla’s notorious volatility: shares swung from $274.40 to $294.85 intraday—a $20 swing in a single trading session. That’s not just noise; it’s a reminder that Tesla’s stock remains a lightning rod for investor sentiment.

What’s Driving the Rally?

The bull case rests on two pillars: production discipline and global expansion. Tesla has slashed its inventory over the past quarter, focusing on selling cars faster than it builds them—a stark contrast to the overproduction that plagued the company in 2023. Meanwhile, Elon Musk’s relentless push into markets like India and Southeast Asia has sparked optimism about untapped demand.

But here’s where the plot thickens: Tesla’s recent gains are partly fueled by short-covering, not just fundamentals. The stock’s short interest has been plummeting, forcing bears to buy shares to cover their positions—a classic setup for a short-squeeze rally.

The Elephant in the Room: Valuation and Competition

Let’s not sugarcoat it. Tesla’s valuation is still under siege. Competitors like Ford (F), General Motors (GM), and even Chinese upstarts like BYD are nipping at its heels with cheaper, faster-charging EVs. Meanwhile, Musk’s side projects—think Twitter and Neuralink—keep investors distracted.

The key question: Can Tesla sustain its production ramp-up for the Cybertruck and Semi trucks, which have historically underdelivered? Musk recently claimed Cybertruck production could hit 250,000 units annually by 2026, but past promises have fallen short. If those targets aren’t met, this rally could unravel.

The Bottom Line: Buy the Dip, or Ditch the Risk?

Tesla’s stock is undeniably cheaper now than it was in late 2024—its price-to-sales ratio has collapsed to 0.5x, down from 3.2x in December 2024. But here’s the rub: the stock’s beta coefficient of 2.1 (meaning it’s twice as volatile as the broader market) means it’s a high-risk bet.

For bulls: The current price of $280 is a steal if Tesla can finally execute on its promises. For bears: The February high of $394 is a brutal reminder of how quickly optimism can evaporate.

Final Take: Proceed with Caution

Tesla’s recent gains are real, but this isn’t 2020. The company’s stock is now a story of execution, not hype. If Cybertruck production hits Musk’s targets and global markets open up, $394 could be just a stepping stone to higher highs. But if supply chain issues resurface—or competition overwhelms Tesla’s pricing power—this rally could fizzle fast.

Investors should treat this as a trade, not a lifetime hold. The $280 price tag offers a margin of safety, but don’t forget: Tesla’s volatility means even a small misstep could wipe out gains.

In short: Tesla’s comeback is exciting, but don’t let hope outweigh the hard data. Stay nimble—and keep an eye on that February high.