Because Tesla shares are on the rise again today

What happened

Actions of Tesla (NASDAQ: TSLA) they are up again on Thursday, extending a bull run for the stock this week. It was up 4.5% at one point on the trading day, but stocks are still up 2.3% as of 1:10 pm EST today.

Shares of the electric car maker could rise Thursday for a combination of reasons, including further momentum following news on Monday that the shares would soon be included in the S&P 500 and an analyst’s recent move to set a target of price of $ 540 at 12 months for growth stock.

Additionally, CEO Elon Musk has set high expectations for the company’s next software update for its “fully autonomous” beta technology.

The Tesla Model X. Image source: The Motley Fool.

So

When discussing Tesla’s beta for “full self-driving” technology, which requires drivers to be ready to take control of the steering wheel and is only available in a limited number of vehicles, Musk wrote on Twitter Thursday morning, “Next week [software] the release is special. “There will be many” fundamental improvements, both major bug fixes and whole new areas of functionality, “he said.

On a related note, Morgan Stanley Analyst Adam Jonas’ decision to update his stock rating earlier this week was largely based on expectations that Tesla can continue to improve its self-driving technology, leading to a significant long-term monetization opportunity. term for the automaker. Investors may begin to give Tesla’s potential in software more weight in their expectations for the stock’s long-term potential.

The shares are now up 22% this week.

Now what

Major improvements to its autopilot and autonomous driving capabilities would bolster Tesla’s thesis of building a major revenue stream from software over time.

While all Tesla vehicles come standard with cameras and sensors that management believes may eventually enable full autonomous driving, customers can pre-pay for this feature for $ 10,000, while also gaining access to other advanced driver assistance features. . The automaker expects this price to rise significantly in the coming years. Furthermore, it is speculated that Tesla could switch to a subscription model for its software.