Why Tesla Stock Jumped 15% on Monday

Tesla (NASDAQ:TSLA) stock surged to start out the week after a surprise visit to China for a huge announcement.

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Tesla (NASDAQ:TSLA) investors were in for more good news to start out the week as shares of the company climbed by 15% and continued to climb throughout the day. So, let’s look at what happened with Tesla stock to get investors back on board with the recently poor performer.

What happened?

The main focus was a huge with in China for Tesla stock and its investors. Chief Executive Officer Elon Musk won tentative approval for his Full-Self-Driving car in China. This came after clearing numerous hurdlers, meeting with government officials, and a surprise visit to the country over the weekend.

The news gave an enormous boost to Tesla stock on Monday after weaker demand led to shares dropping like a stone over the last few months. Yet, as in the past, Tesla stock has been known to go through these periods of yo-yo-like activity.

The details

The government in China gave Tesla stock approval to launch the Full Self-Driving car on Sunday after Musk met with Chinese Premier Li Qiang. In fact, after the meeting, Li stated that Tesla stock has been “a successful example of Sino-U.S. economic and trade cooperation.”

The key hurdle was the data security tests, which Tesla stock passed, according to the China Association of Automobile Manufacturers. So, now, Tesla vehicles have been approved to drive in areas that were previously restricted for the company.

The unclear part is whether Tesla stock will be able to now export the Full Self-Driving car back into the United States. However, on the April earnings call, Musk said the electric vehicle (EV) company would aim to release the Full Self-Driving car in “any market … where we can get regulatory approval.” And that now includes China.

Launch date

There still isn’t a launch date for the Full Self-Driving car. However, according to Tesla stock’s website, it’s now noted to be “coming soon” after “to be launched later” was removed from the site. The hope? This, in the meantime, will not just increase the company’s share price in the short term but also in the long term through more sales.

Tesla stock’s China sales have continued to struggle over the last few years. This comes from high competition among other EV providers. What’s more, those other providers have been offering EVs for a far lower price.

Tesla stock has tried to catch up by offering lower prices for their models. But this has led to a mixture of lower demand at a lower price. Investors have been hesitant to pick up the stock since then.

Bottom line

However, this new excitement could lead to another round of upward share movement for the stock. Tesla stock has no new models to show off in China, but the Full Self-Driving vehicle could be a huge win in the country. So, with shares up 37% since earnings yet still down 35% from 52-week highs, investors thinking about Tesla stock may now see it as the right chance to jump back in.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Tesla. The Motley Fool has a disclosure policy.

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