In a volatile session, Tesla shares fell into negative territory during Monday afternoon trading, returning a jump of over 14% from the start of the session that had pushed the stock to a new all-time high.
However, the move into negative territory was brief, and around 2:45 pm ET, the stock traded approximately 3% higher.
Tesla has been in a record race as investors continue to favor the company led by Elon Musk. And as the valuation grows higher and higher, speculation grows that it will soon join the S&P 500.
During morning trading, Tesla’s market value at one point reached $ 321 billion, according to FactSet. This made it the 10th largest US stock by market value, beating Procter & Gamble, according to FactSet.
For the year, the stock rose more than 300%. In early July, Tesla overtook Toyota to become the world’s largest automaker by market value.
Shares were up more than 55% in July alone after the company easily beat second-quarter delivery estimates, delivering about 90,650 vehicles. Analysts surveyed by FactSet expected 72,000.
Investors now believe the company could report a fourth consecutive quarter of GAAP earnings when it releases second-quarter results on July 22, meaning it could be considered for inclusion in the S&P 500.
Tesla’s valuation, and the controversial founder, has been the subject of heated debate on the street for years, with investors open on both sides.
And some, including Larry McDonald, editor of The Bear Traps Report, believe that the recent race is not driven by fundamental strength, but by investors offering stocks before the company’s possible inclusion in the S&P 500.
“By buying Tesla TSLA now, leaders are forcing the S&P indices to give stocks a growing weight,” he wrote in a recent note. “Therefore, ETFs / Indices will be forced to pay, buying even more shares. Then the hot money leaves, leaving the indices holding the bag,” he said.
Meanwhile, Adam Jonas, the widely-followed auto analyst at Morgan Stanley, said Friday that “the day of Tesla’s virtually undisputed dominance may be numbered.” It has an underweight stock rating and a price target of $ 740, which is 52% lower than where the stocks closed on Friday.
But there are plenty of bulls across the table, including Joe Osha of JMP Securities, who said in a recent note to customers that Tesla will earn $ 100 billion in annual revenue by 2025. For its last full fiscal year, Tesla generated $ 24.6 billion in revenue.
Still, despite Osha’s bullish stance, his $ 1,500 target is below where the shares are currently trading.
According to estimates compiled by FactSet, the highest target on the street is $ 1,525, also below where the shares are currently trading, while the average target is only $ 805.
– CNBC’s Michael Bloom contributed reporting.
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