Nearly a month into 2022, the future of Tesla (NASDAQ:TSLA) is receiving considerable speculation. There’s plenty of reason for this. Yesterday, Tesla stock rose in the face of analyst report predicting an industry tipping point. Today, it’s back to falling as good news looms on the horizon. And while the company appears to be making strides in both self-driving technology and ramping up production, little is known for sure. Today brought reports of a positive development, though. It calls to mind some new catalysts that are worth noting when evaluating Tesla.
What’s Happening With Tesla Stock
Tesla stock is ready to end this week in the red. After rising yesterday, shares are down 4% on Friday. The stock fell hard this morning and tried unsuccessfully to rally. Even with yesterday’s gains, it is down more than 9% for the past five trading days.
However, a report from Electrek this morning indicates that Tesla may have better days ahead.
According to the article, California-based startup Autonomy is offering consumers a new, easy way to acquire a Tesla. The company’s website bills this endeavor as the “The cheapest, fastest, easiest way to get a Tesla Model 3.” This is good news for the electric vehicle (EV) innovator for multiple reasons. Let’s take a closer look at its broader implications.
Why It Matters
The way it looks from here, there are multiple catalysts at play that can help drive Tesla stock up.
Autonomy extends to customers a subscription-based service that will allow them to take home a Tesla Model 3. Its plans begin at $550 per month, although they require a $5,500 initial fee. The company has already purchased 100 Model 3s and it plans to expand its fleet to 10,000 by the year’s end. This will likely depend on the success of the new venture, but if it goes well, the company may purchase even more Tesla EVs.
Fleet deals have already proven a boon to Tesla stock. In late October 2021, rental car company Hertz (NASDAQ:HTZZ) ordered its own fleet of 10,000 Tesla vehicles. As InvestorPlace contributor Chris MacDonald noted, “For Tesla, this massive $4.2 billion order is significant. A company that has focused primarily on a direct-to-consumer model now has a wholesale order.”
Indeed, the deal did send Tesla stock rising. MacDonald correctly speculated that investors were liking what the deal implied for the company. Autonomy isn’t as large or well-established as Hertz, but this type of exposure could certainly be beneficial.
As the Financial Times reported, deals like the one struck by Tesla with Hertz often inspire other companies to follow suit. The trend of rental car companies building EV fleets will only serve to benefit companies like Tesla. Companies whose business involves putting drivers in cars certainly want their holdings to include Tesla vehicles. That’s good news for the company and the stock.
Hertz wasn’t the only reason Tesla stock enjoyed such strong growth in October. At the same time, Uber (NYSE:UBER) announced it was planning on making its U.S. fleet completely electric. This meant acquiring 50,000 Tesla vehicles. Partnering with the rental car company, Uber introduced a policy of paying its drivers to use rented Tesla vehicles from Hertz. It’s easy to see how this would be a booster for both stocks. Other ride-hailing apps such as Earth Rides, that feature only EVs, have also purchased Tesla fleets.
What It Means
Tesla stock has seen plenty of turbulence this month, and it may not be over. That doesn’t mean, though, that these positive market trends won’t help it rise in the months ahead.
Growing interest from rental and leasing companies is a trend that can absolutely help the company. The trend is something of a double-edged sword in the sense that it serves to boost sales for fleet building while also exposing more drivers to Tesla vehicles.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.