Tesla’s stock is trading near its all-time highs, approaching $488.77 on Tuesday, even as the company faces significant sales challenges in Europe. This resilience is attributed to a pivotal court ruling and a fundamental shift in how Wall Street perceives the electric vehicle maker’s core business.
A Legal Victory Resolves Key Uncertainty
A major overhang for investors was removed on December 19th when the Delaware Supreme Court reinstated CEO Elon Musk’s 2018 compensation package. Valued at approximately $139 billion, this award is now seen as firmly realigning Musk’s long-term focus on artificial intelligence and robotics with shareholder interests. The court’s decision has been interpreted as securing his commitment to Tesla’s most ambitious future technologies.
The market’s response was swift. On December 22nd, Canaccord Genuity raised its price target to $551, a significant increase from its previous target of $482. In a separate move, RBC Capital Markets reiterated its buy rating, setting a price target of $500—precisely where the stock recently traded.
European Sales Contraction Highlights Competitive Pressure
Operational data presents a contrasting picture. In November, Tesla’s new vehicle registrations in the European Union plummeted by 34.2% to just 12,130 units. Consequently, its market share within the EU’s electric vehicle segment dwindled to a mere 1.4%. This decline coincides with aggressive expansion by competitors; Chinese automaker BYD nearly tripled its registrations during the same period, gaining substantial ground through competitive pricing.
Should investors sell immediately? Or is it worth buying Tesla?
The fact that Tesla’s shares continue to hover near their historic peak of $495.28, reached on December 17th, underscores a dramatic change in valuation logic. The market is increasingly pricing Tesla as an AI and robotics enterprise rather than a conventional automobile manufacturer. This evolving perception helps explain its price-to-earnings ratio, which remains above 300.
Scrutiny on Autonomous Driving Claims
Discrepancies between public statements and observable reality are also emerging in Tesla’s autonomous driving initiatives. While the company discusses expanding its robotaxi pilot programs, independent trackers have identified only about 135 vehicles currently in operation, primarily concentrated in the Bay Area and Austin. A closer look at Austin revealed just 32 distinct modified Model Y vehicles, with only 5 to 10 operating simultaneously within the limited test zone.
The $500 Threshold and What Comes Next
The $500 price level remains a critical psychological barrier for the stock. A sustained breakout above this point could trigger further algorithmic buying, potentially bringing Canaccord’s $551 target into view. However, if disappointing European figures begin to carry more weight with investors, support around the $470 level may be tested. All eyes are now on the Q4 delivery numbers, due in early January, which will reveal whether record sales in China and the United States can offset the pronounced weakness in Europe.
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