Tesla: Get Ready To See It Trading Above $400 Again

Key Points

• Tesla has rallied 40% since earnings, breaking out of a bullish double-bottom pattern.
• Piper Sandler just issued a $400 price target, citing the long-term upside from Full Self-Driving (FSD) software.
• Investors are re-engaging with the autonomy and growth narrative despite short-term margin pressures.

Shares of Tesla Inc NASDAQ: TSLA closed just under $320 on Monday, extending a powerful rebound that began after its Q1 earnings release last month. That report, while technically a miss on headline numbers, appears to have reset market expectations and removed a major overhang. Since then, the stock is up nearly 40%, rallying from a textbook double bottom and reestablishing itself as a momentum leader in the large-cap tech space.

The rally gained fresh fuel last week when Piper Sandler issued a fresh $400 price target, calling Tesla's Full Self-Driving (FSD) software a potentially transformative growth lever. That target implies roughly 25% upside from current levels and helped re-anchor the bullish narrative around Tesla's long-term software and autonomy ambitions.

With momentum building and analysts beginning to turn more constructive, the risk/reward setup for Tesla may be entering a new phase.

Technical Breakout From Double Bottom Formation

After testing the $220 mark in both March and April, but failing to close much lower both times, Tesla has now clearly broken out of a double bottom pattern, a technical setup often seen as a strong reversal indicator. That breakout was confirmed by both price action and volume, with shares consistently pushing higher in the weeks since.

Momentum indicators have also turned decisively bullish. The RSI is trending upward but not yet in overbought territory, suggesting there may still be room to run. Meanwhile, the MACD has crossed into positive territory with widening divergence, and volume has stayed elevated on up days. These are classic signs that institutional money is returning and the bulls are firmly in control.

What Changed After Tesla Earnings?

The earnings report in the last week of April fell short of consensus expectations, particularly on margins, which continue to be squeezed by price cuts and competition. However, investors seemed more focused on the tone of the call and the steps Tesla is taking to stabilize the business.

CEO Elon Musk reaffirmed Tesla's commitment to rolling out its robotaxi platform, which he hinted could be unveiled as early as August. While the FSD timeline has been criticized in the past, Musk's renewed focus on autonomy, paired with a series of updates suggesting improvements in the software, seems to have reignited enthusiasm around Tesla's differentiation from traditional automakers.

Crucially, the company also announced that it would begin production of a next-generation, lower-cost vehicle at its Texas factory in the second half of 2025. That eased fears about demand softening and helped refocus the market on Tesla's long-term volume ambitions.

Piper Sandler's $400 Target: Betting on FSD

Piper Sandler's reiteration of its $400 price target has drawn attention because the firm specifically emphasizes Tesla's software opportunity.

In its latest note, the firm highlighted that the company's existing FSD beta deployment, combined with its vast data advantage and increasingly refined AI models, positions Tesla uniquely in the race toward Level 4 and Level 5 autonomy.

According to the analysts, even modest adoption of FSD as a paid software feature or a move toward subscription pricing at scale could outsize Tesla's gross margins and valuation.

That view underpins the bullish outlook and reinforces a common thesis among long-term bulls: Tesla is not just a car company; it's a technology and energy platform.

Valuation Still Hotly Debated

Despite the recent run-up, Tesla's valuation remains a point of fierce debate. The stock currently trades with a P/E ratio north of 175, expensive by traditional automotive standards but perhaps more reasonable when viewed through the lens of a high-growth tech company with optionality in software, energy storage and AI.

Bulls argue that Tesla's vertical integration, brand power, and software edge justify a premium multiple. Bears, meanwhile, point to falling margins, fierce competition in China, and delayed timelines on autonomy as reasons for caution.

Bottom Line: Risk/Reward Back in Focus

The recent rally has reset the tone around Tesla and brought back many of the long-term narratives that once drove it to a $1 trillion valuation. The chart looks strong, analyst sentiment is warming, and key milestones on autonomy and next-gen vehicles lie ahead.

It's too early to call this a full return to form for Tesla, but with the stock moving decisively higher and a fresh $400 target now in focus, bulls finally have something to cheer about again.