Why Is Tesla Stock Soaring Today?

By Johnny Rice | October 27, 2025, 3:37 PM

Key Points

Shares of Tesla (NASDAQ: TSLA) are flying on Monday, up 4.8% as of 3:12 p.m. ET. The move comes as the S&P 500 and the Nasdaq Composite gained 1% and 1.7%, respectively.

The electric vehicle (EV) maker's stock is on the move after news broke that trade tensions between the United States and China may be cooling.

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Trump signals possible breakthrough in China trade talks

After weeks of escalating rhetoric leading up to trade negotiation with President Xi Jinping of China, President Donald Trump said today that he believes the two countries will reach an agreement, saying that he has "a lot of respect for President Xi" and that they will reach a deal.

Trade tensions between the U.S. and China have driven up costs for many companies in the U.S., including Tesla, which revealed a $400 million tariff hit in its Q3 earnings.

Teslas charging in a parking lot.

Image source: Tesla.

Tesla's valuation is still a problem

Regardless of the outcome, I believe Tesla is overvalued. The company's stock trades with a price-to-earnings ratio of nearly 260 and is priced with the assumption that the company will deliver on its lofty promises -- fleets of self-driving robotaxis on the roads and humanoid robots becoming commonplace. I have my doubts about the company's ability to usher in its vision of the future.

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Johnny Rice 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.

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