Tesla's Tumultuous Week: Gains, Challenges, and Optimism in the Face of Legal Battles

Last week, Tesla (TSLA) saw a price increase of 2.29%, marking three consecutive days of gains, with a total rise of 6.78% over that period. In the last week alone, the stock appreciated by 8.93%. Nevertheless, since the beginning of the year, Tesla's stock has decreased by 18.37%, with a current market cap of $1.063 trillion.

Investment firm Wedbush maintains a bullish stance on Tesla, assigning it an "outperform" rating and setting a price target of $500. A significant factor in their optimism is the anticipated release of the revamped Model Y. With many consumers eagerly awaiting this updated version, it is expected to bolster Tesla's sales numbers.

Furthermore, Tesla is heavily investing in advancing its self-driving technology. The planned launch of autonomous taxis is seen as a critical step forward. Should this initiative succeed, it could provide Tesla with a new revenue stream. Analysts believe the political environment under the former U.S. administration might have aided Tesla in navigating regulatory hurdles more smoothly, potentially allowing the company to hasten its development pace and focus more effectively on new products. Tesla's shares are currently well below the targeted $500, making it an attractive opportunity for some investors.

On the other hand, there are ongoing challenges for Tesla. Reports surfaced on Friday that Tesla will be dissolving its Dojo supercomputer team, with its leader expected to depart. This move could disrupt Tesla's plans for developing in-house chips for autonomous driving. CEO Elon Musk mentioned that focusing on disparate AI chip designs diverts resources unnecessarily. Instead, Tesla will prioritize developing AI5 and AI6 chips, which are expected to excel in inference tasks. Many Dojo team members have transitioned to the newly formed DensityAI, while others have been reassigned internally.

Further developments include Texas authorities granting Tesla's Robotaxi a license to operate within the state, paving the way for their autonomous vehicles. Additionally, Tesla is increasing its reliance on external partners, utilizing computing technologies from companies like NVIDIA and AMD and employing Samsung's chip manufacturing services.

Meanwhile, Tesla is facing legal hurdles. A class-action lawsuit was filed by shareholders accusing Elon Musk and Tesla of securities fraud by allegedly concealing safety risks related to their autonomous vehicles. The lawsuit followed results from Tesla's robotaxi trial in Austin, which revealed various operational issues, leading to a drop in Tesla's stock by 6.1% over two days. This legal action underscores growing scrutiny over Tesla's bold claims regarding its self-driving technology.

Despite these challenges, optimism continues around Tesla's Full Self-Driving (FSD) system, with CEO Musk announcing significant progress in its new model. The FSD system is integral to Tesla's strategy and is expected to enhance the company's revenue streams. The updated model promises a tenfold increase in parameter scale and improved video compression, a release anticipated by next month, contingent upon successful testing.