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Tesla shares surge to record high, leaving rivals behind

Stock Markets Aug 27, 2020 04:15PM ET
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© Reuters. Tesla Inc. Gigafactory 2, which is also known as RiverBend, is pictured during the spread of coronavirus disease (COVID-19), in Buffalo, New York
 
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By Tina Bellon

(Reuters) - Tesla (NASDAQ:TSLA) Inc shares continued their meteoric rise on Thursday, scoring yet another record high and further expanding the distance between the Silicon Valley electric carmaker and its traditional auto industry rivals.

Tesla shares rose to $2,290 in mid-day trading before leveling out at $2,240, the highest price since the company went public at $17 a share in 2010.

Tesla's shares have risen more than 420% since the beginning of this year, turning some retail investors into millionaires.

While other carmakers are forced to invest billions to overhaul their internal combustion engine operations to produce battery-powered cars, investors are confident that Tesla can make the shift from a niche carmaker into a global leader in cleaner cars.

Tesla became the world's most valuable carmaker by market capitalization when it overtook former front runner Toyota Motors Corp on July 1. The company now accounts for 41% of the total market cap of a group of 12 of the world's largest automakers.

(Graphic: Tesla stock rally dwarfs rivals' market cap Tesla stock rally dwarfs rivals' market cap - https://graphics.reuters.com/TESLA-STOCKS/xklvynnqepg/chart.png)

Tesla produces only a fraction of the vehicles sold by established global carmakers, many of which are considered growth engines for their local economies.

Japan's Toyota and Germany's Volkswagen AG (DE:VOWG_p) sold 10.46 million and 11 million vehicles, respectively, during the 2019 financial year. That compares to the 367,200 vehicles Tesla delivered in 2019.

Tesla has said it would deliver at least half a million vehicles by the end of 2020, less than 5% of Toyota's and Volkswagen's annual sales.

But Tesla withstood industry-wide fallout from the novel coronavirus pandemic and in July reported a second-quarter profit, clearing a hurdle that could lead to the electric carmaker's inclusion in the S&P 500 index.

Tesla shares surge to record high, leaving rivals behind
 

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Comments (3)
Iam Suleman
YesomiteSam Aug 27, 2020 6:49PM ET
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Twenty years ago if a company had P/E ratio of 850, nobody with even touch it with ten feet pole.  It might go to 3000 and people will still buy it because there are too many retail investors out there working remotely or just collecting easy money and trying to score some profits while not working.  It will come down eventually but there will be a lot of bag holders.
Rosta Pilny
Raasta Aug 27, 2020 5:29PM ET
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no fundamental reason at all, just Ponzi scheme. Congrats to early buyers, your gains will be paid by late buyers, not me.
Max Air
Max Air Aug 27, 2020 4:47PM ET
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The comparison of production volumes between Tesla, Toyota and VW shouts loud: people, you are insane!
Moe Hassad
Moe Hassad Aug 27, 2020 4:47PM ET
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Its tje hype man bit when it goes down it willllllllll go down
 
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