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Tesla shares surge 13% as strong deliveries drive profit optimism

Stock MarketsJul 06, 2020 04:55PM ET
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2/2 © Reuters. FILE PHOTO: The Tesla logo is pictured on an electric car at Brussels Motor Show 2/2

By Noel Randewich

(Reuters) - Shares of Tesla Inc (O:TSLA) surged 13% to a record high on Monday, extending their rally to over 40% in five sessions after analysts raised their price targets on the electric car maker following its strong quarterly deliveries.

The day's jump increased Tesla's stock market value by $30 billion, eclipsing the entire value of Ford Motor Co (N:F), currently at $25 billion.

JMP Securities increased its price target to $1,500 from $1,050 after Tesla on Thursday reported higher-than-expected second-quarter vehicle deliveries, defying plummeting sales in the wider auto industry as the coronavirus pandemic slammed the global economy.

"We believe that the question to be considered is not whether the stock is expensive on current valuation measures, but what the company's growth and competitive position signal about the stock's potential for the next several years," JMP Securities analyst Joseph Osha wrote in a client note. Tesla's annual sales could hit $100 billion by 2025, he predicted.

JPMorgan (NYSE:JPM), which rates Tesla "underweight," raised its price target to $295 from $275, while Deutsche Bank (DE:DBKGn) upped its target to $1,000 from $900. The median analyst price target for Tesla is $675, compared with its current price of $1,372, according to Refinitiv.

Tesla's solid delivery numbers heightened expectations of a profitable second quarter, which would mark the first time in Tesla's history that it would report four consecutive quarters of profit.

However, with Tesla's stock up nearly 500% over the past year, many investors believe the rally is unsustainable. The stock is trading at 158 times expected earnings, according to Refinitiv, an exceptionally high valuation.

Following Monday's surge, Tesla's market capitalization stood at $245 billion, growing its lead as the world's most valuable automaker.

Tesla shares surge 13% as strong deliveries drive profit optimism
 

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Comments (9)
Large Father
Large Father Aug 27, 2020 2:37PM ET
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The headline should read “TSLA up 13% as average American investors are still more.ons and day ends in Y”
Dietmar Stahl
Dietmar Stahl Jul 07, 2020 8:21AM ET
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Per Harvard scientists the earth maximum people capacity is 9-10 Billion. We are nearly at 8 Billion so in 10-15 years we Max out. So there would be a cap on sales....
Vincent TT
Vincent TT Jul 06, 2020 7:12PM ET
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Is Tesla still selling cars? Or are they the amazon now? Who is buying cars?
Vincent TT
Vincent TT Jul 06, 2020 7:11PM ET
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I see recession futures where people dont have money to buy food let alone card
Vincent TT
Vincent TT Jul 06, 2020 7:10PM ET
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Pump it up pump it up!
Daniel Sanchez
Daniel Sanchez Jul 06, 2020 4:20PM ET
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Why cry ? Buy a pullback, are you a trader or not ?
eddie glass
eddie glass Jul 06, 2020 4:00PM ET
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shorted TSLA from 400 to 900, longed from 900 to 400, shorted from 400 to 1370, now in long again
eddie glass
eddie glass Jul 06, 2020 3:48PM ET
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how in the heck can a company that sold only 90k cars have a market cap of 250 billion. that is nearly $3 million per car of market cap.
Jay Khaye
Jay Khaye Jul 06, 2020 3:48PM ET
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Its called money laundering.
eddie glass
eddie glass Jul 06, 2020 3:38PM ET
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TSLA market cap is $250 billion
 
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