Shares of American electric vehicle manufacturer Tesla Inc. are now valued on a par with many acknowledged heavyweights of US industry after an impressive rally, according to MarketWatch.
Tesla's market value is currently close to $286 billion, setting the electric-car maker above that of companies like Home Depot Inc., Intel Corp. and UnitedHealth Group Inc.
Judging by data provided by FactSet data, Tesla is also more valuable than Bank of America Corp. and American Express Co. combined.
While the S&P 500 and Dow Jones Industrial Average are registering losses amid the pandemic-induced recession in the US economy, the car maker’s shares soared on 13 July by 16 percent to reach $1,794.99, bringing it closer to the top 10 US companies in terms of market capitalisation.
However, Tesla had lost 3.1 percent of these daily gains by the end of the trading session.
Posting a steady increase in nine of the past 11 sessions, the company’s stocks have more than tripled in value this year.
Surprise Profits Anticipated
Optimism regarding Tesla Inc. has emerged from an earnings report for 22 July, which is believed to have driven the current rally in part, with investors anticipating a surprise profit from the company, which has never posted a profitable year.
It has, however, enjoyed several individually profitable quarters, as was the case in the quarters ending September 2019, December 2019, and March 2020. Over the past three quarters of 2020, Tesla's profits have marked their longest-yet run of profitability.
On 1 July 2020, Tesla Inc. became the world's most valuable automaker by market capitalisation, exceeding Toyota, as it scored a market value of US$206 billion.
Tesla’s blistering stock rally is putting Elon Musk in reach of a payday potentially worth $1.8 billion, his second jackpot from the electric car maker in about two months https://t.co/SBbsYAopaw @randewich pic.twitter.com/UdAkeL5rB6— Reuters Business (@ReutersBiz) July 8, 2020
If the car-maker were to secure a profit, its shares could anticipate even more potential activity as Tesla would become eligible for inclusion in the S&P 500 index, becoming the 13th-biggest company in the index, lagging just behind JPMorgan Chase & Co., with a market value of around $298 billion.
For inclusion in the index, a company has to report an accumulated profit over four consecutive quarters.
Along with profits, Tesla has grown its deliveries, as the company expects to deliver more than half a million electric cars in 2020.
Tesla’s rally has been feeding into the debate around its future, as some investors predict shares will tumble in a collapse reminiscent of the dot-com bubble, also known as the tech bubble, when excessive speculation regarding Internet-related companies in the late 1990s generated a stock market bubble that led many companies to lose a large portion of their market capitalisation.
Others have been buying Tesla shares, hailing its underappreciated opportunities, claiming the rise is fundamental and that like Apple Inc., great things are ahead for the electric car-maker.