Tesla jumped 14% on speculation of inclusion of S&P 500 - now 10th largest US stock by market value
Tesla shares hit a new all-time high on Monday, raising the stock's record run as investors continued to pile into the company led by Elon Musk. And as the company's valuation climbs ever higher, speculation is mounting that the company will soon join the S&P 500.
The report's shares on Monday rose to a new record high, pushing the clean-energy carmaker's value to more than $ 330 billion, as investors bet the stock headed to join the S&P 500 Used to be.
According to FactSet, after Monday's open, Tesla's market value rose to $ 321 billion. According to FactSet, it is the 10th largest US stock by market value, Leapfrogging Procter & Gamble.
Shares were up another 14% on Monday, after closing at an all-time high on Friday. For the year, the stock is up over 300%. Earlier in July, Tesla topped Toyota to become the world's largest automaker by market value.
The stock alone rose more than 55% in July, after the company badly beat delivery estimates in the second quarter, with 90,650 vehicles against the Street estimate of 72,000.
Investors now believe the company may report a fourth quarter of GAAP profits after second quarter results on July 22, meaning it could be considered for inclusion in the S&P 500.
Tesla's valuation - and controversial founding - has been hotly debated by the Street for years with vocal investors from both sides.
And some, including Bear Trap Report editor Larry McDonald, believe the recent run is driven not by fundamental strength, but by investors bidding for shares before the company's possible inclusion in the S&P 500.
“By buying up Tesla TSLA now, front-runners are forcing the S&P Indexes to give the stock a higher and higher weighting,” he wrote in a recent note. “Thus, ETFs / Indexes will be forced to pay up, buying even more shares. Then the hot money exists, leaving indexes holding the bag,” he said.
Meanwhile, Adam Jonas of Morgan Stanleys widely followed Auto Zonal said Friday that the days of Teslas almost unchanged dominance may be numbered. They have a low weight on the stock and a price target of $ 740, down 52% when the stock closed on Friday.
But there are plenty of bulls on the other side of the table, including JMP Securities’ Joe Osha, who said in a recent note to clients that Tesla will earn $100 billion in annual revenue by 2025. For its latest full fiscal year, Tesla generated $24.6 billion in revenue.
Still, despite Osha's rapid stance, his $ 1,500 target is below where the stock currently trades.
According to estimates compiled by FactSet, the highest target on the Street is $ 1,525 - even below where the stock currently trades - while the average target is just $ 805.
Taken together, this means Tesla stock again. The profit size seems surprising, but based on the news the direction of the move does not seem surprising at all.
Tesla shares have gained an incredible 620% over the past year, comparable to the S&P 500 and the Dow Jones Industrial Average, as well as Tesla's automotive peers.
