Tesla's $350 Billion Rally Isn't Just A Rebound — Gene Munster Says It's Riding On Margins, Robotaxis, AI And Elon Musk
Tesla's shares have surged 46% since late April, adding $350 billion in market cap, driven by better-than-expected automotive gross margins and the anticipated launch of its ride-hailing service. Gene Munster attributes 65% of the rally to these factors, while 25% is linked to eased tariff concerns. Despite a 71% drop in first-quarter profits, Tesla's future relies on its autonomy initiatives, with a planned robotaxi launch amid regulatory scrutiny. The stock has rejoined the trillion-dollar valuation club, although it remains down 8.1% year-to-date in 2025.
Tesla Inc. TSLA shares have surged 46% since late April, adding $350 billion in market capitalization despite expected delivery declines, according to Gene Munster, Managing Partner at Deepwater Asset Management.
What Happened: Munster attributes 65% of the rally to two key factors: better-than-anticipated automotive gross margins and Tesla’s reaffirmed timeline for launching its ride-hailing service in Austin.
“The reason investors are looking the other way is that Tesla remains the best-positioned company in physical AI — and long term, that should be worth more than $1.1 trillion,” Munster wrote Wednesday on X.
Another 25% of the stock’s momentum came from the May 10 pause on China tariffs, which eased concerns about potential 145% parts cost increases. The 10% move followed news that Tesla’s Board is developing contingency plans for Elon Musk‘s contested 2018 pay package.
Why It Matters: The planned June robotaxi launch comes as federal regulators scrutinize how Tesla’s autonomous vehicles will handle challenging conditions. CEO Musk has promised a nationwide rollout by year-end, despite the National Highway Traffic Safety Administration requesting additional safety information.
“Heavy lifting ahead,” warns tech analyst Dan Ives, who estimates “15% to 20% permanent demand destruction” in Europe amid rising competition from Chinese automakers like BYD Co. Ltd. BYDDF.
With first-quarter profits down 71%, Ives believes Tesla’s future increasingly hinges on its autonomy initiatives. The ride-hailing opportunity could significantly impact Tesla’s financial profile, with Munster noting the U.S. market generates approximately $90 billion in annual gross bookings across 4 billion rides.
Price Action: Tesla rejoined the trillion-dollar valuation club Wednesday after climbing 40% from April lows, though shares remain down 8.1% year-to-date in 2025.
