Tesla stock rebounded 3.7% on Wednesday after a 5.3% decline on Tuesday. Tesla Inc. was granted approval in California to begin carrying passengers in its vehicles as Elon Musk’s company takes steps toward offering ride-hailing services.

The California Public Utilities Commission said in an emailed statement Tuesday that it approved the electric-vehicle maker’s bid for what’s known as a transportation charter-party carrier permit. That will allow Tesla initially to drive its employees on a prearranged basis in company-owned vehicles, before later transporting members of the public.

Bloomberg reported last month that Tesla had applied for the permit as it works to launch a promised ride-hailing business, opening a new revenue stream and putting it in competition with the likes of Uber Technologies Inc., Lyft Inc. and Waymo. Musk has said Tesla would roll out driverless ride-hailing in Austin in June and aimed to offer it in California by the end of the year, without offering specific details.

The new permit is separate from those used by ride-hailing companies, which offer similar services for compensation using smartphone apps. The approval also does not allow Tesla to offer rides in autonomous vehicles, the California commission said.

Analysts’ Opinions

Stock analysts at Cantor Fitzgerald, the firm long led by now-U.S. Commerce Secretary Howard Lutnick, upgraded their rating on Tesla Inc., the carmaker run by White House adviser Elon Musk.

Tesla’s shares are a buy after having fallen almost 45% this year, Cantor analyst Andres Sheppard wrote in a report to clients Wednesday, citing takeaways from a visit to the carmaker’s factory in Austin on Tuesday.

“The recent selloff represents an attractive entry point for investors,” Sheppard wrote, adding that Cantor is bullish about upcoming catalysts including Tesla’s plan to start offering a paid autonomous taxi-hailing service in the Texas capital in June.

Weeks of bad losses have made Tesla more attractive to Cantor Fitzgerald analyst Andres Sheppard.

He upgraded Tesla stock to Buy from Hold, citing "material catalysts" for shares.

"We believe the recent selloff represents an attractive entry point for investors with greater than 12-month investment horizon (and who are comfortable with volatility)," wrote Sheppard.

Things Sheppard believes will drive share higher in the coming months include: starting to sell full self-driving, or FSD, Tesla's highest-level driver assistance product, in China this quarter; starting to sell FSD in Europe in the first half of 2025; a robotaxi rollout in the second half of 2025; a new model for sale in the second half of 2025; and robot production and sales in 2026.

Sheppard kept his price target at $425. An upgrade with an unchanged price target shows something is up with the stock. There has been a lot for investors to digest.