Why Tesla Stock Raced Ahead 5% on Monday

Shares of Tesla (NASDAQ: TSLA) surged 5.5% through 11 a.m. ET on Monday, enjoying a tailwind from two separate analysts. According to a report by StreetInsider.com, Piper Sandler said that Tesla might have achieved a key milestone with its latest version of its full self-driving (FSD) software.

Meanwhile, Morgan Stanley explained why Tesla is its top pick in the automotive sector .

What Piper Sandler said about Tesla

Citing positive reviews of Tesla's latest FSD software on the social media site X (owned by Tesla CEO Elon Musk), Piper said that sales of subscriptions to the software are key to the company's profits, so the electric vehicle (EV) maker must sell more subscriptions to get profits growing again. And the key to that is developing and selling a new EV model (usually referred to as the Model 2) for under $30,000.

Piper believes that succeeding in the latter task will unlock demand for FSD subscriptions, while success in getting FSD to work will permit Tesla to quintuple its monthly charge for FSD to more than $500. The analyst sees both these trends converging around 2030.

By then, Piper said, if Tesla is selling more cheap EVs, it will have more opportunities to sell expensive self-driving software, earning high profit margins from the latter.

A cautionary note

Morgan Stanley's Adam Jonas -- a longtime Tesla fan -- is quoted on TheFly.com today saying that the stock is a buy, predicting it will rise 40% this year, while cautioning that near-term expectations for FSD could be too high.

Both analysts could turn out to be correct. Tesla might not have all the kinks worked out of its FSD software just yet, but it could by 2030, in time to profit from a surge of new Model 2 EV sales.

So does this make Tesla stock a buy? We might all have to wait six years to find out.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy .