Tesla became the first $100 billion publicly listed U.S. carmaker in extended trading on Tuesday, in a sign of Wall Street's confidence in an all-electric future.
Tesla shares were last up 3.6% at $566 in trading Wednesday, building on a 7.2% gain during trading when brokerage New Street Research raised its price target to $800.
The milestone comes less than a month after Tesla's stock crossed $420, the infamous price at which Chief Executive Officer Elon Musk had tweeted he would take the electric car maker private, before scuttling those plans. Musk tweeted he had "funding secured" to take Tesla private in August 2018, when its shares were trading in the mid-$330s, only to later give up under investor pressure and regulatory concerns.
Tesla's market value also puts Musk a step closer to earning the first $346 million tranche of options in his record-breaking pay package. The $100 billion valuation needs to stay for both a one-month and six-month average in order to trigger the vesting of the first of 12 tranches of options granted to Musk to buy Tesla stock.
Tesla, which is already valued more than Ford and General Motors combined, has seen its stock more than double in the past three months, fueled by a rare quarterly profit in October, news of production ramp-up in its China factory and better-than-expected annual car deliveries.
In another win, Tesla reached a settlement with Michigan to allow it to directly deliver its vehicles to customers in the state, a person familiar with the agreement said on Tuesday.
Tesla shares have skyrocketed in the past few months, rising a whopping 210% since June last year, despite being one of the most shorted stocks in the world. "The rise in the value of Tesla tells us little about the health of the car market (modest in the U.S., weaker in Germany and China), but a lot about investor behavior and the state of banking," says Mike O'Sullivan, author and ex-CIO at Credit Suisse IWM. "Anyone who thinks the sharply rising price is an indicator of Tesla’s future is mistaken."
Tesla's meteoric rise in stock markets comes even as the brainchild of Elon Musk has yet to show a profit on an annual basis. With the Fed flooding markets with liquidity, fundamental attributes of a good stock such as earnings, corporate strategy and good governance have taken a back seat. "By October of last year there was a sizable community of investors skeptical that Tesla would ever become a profitable business. This set of investors had established large ‘short’ positions in Tesla stock," O'Sullivan said. "However, as markets rose, they were forced to cover or buy back these short positions, pushing the price ever higher."
By 12-month forward sales estimates, Tesla is not even among the top 20 automakers in the world. Here's a quick look at where Tesla stands versus the world's top five by market value, based on the companies' sales forecasts:
- VW, $283 billion
- Toyota, $276 billion
- Daimler, $191 billion
- BMW, $115 billion
- Tesla, $31 billion