Tesla shares soared 14% on Monday due to speculation that they will be added to the S&P 500. However, the shares reverted to red briefly in the afternoon on a wild day of trading before reverting to green before that the market closed.
Tesla shares near $ 1,800 on S&P 500 speculations
The actions have been in an impressive race. To date, Tesla’s stock has risen more than 300%. The company moved to Toyota to become the world’s most valuable automaker earlier this month. In July alone, stocks rose more than 55% since the company exceeded delivery expectations for the second quarter.
Tesla delivered around 90,950 vehicles during the second quarter, while the FactSet consensus was 72,000. The automaker will report its second-quarter earnings on July 22, and investors now expect it to report a fourth consecutive quarter of GAAP earnings. That could make Tesla’s shares eligible to be included in the S&P 500.
According to CNBC, some like Larry McDonald of The Bear Traps Report believe Tesla stocks are rising because investors expect them to add to the S&P 500 instead of relying on fundamental strength. He said in a recent note that by buying Tesla shares now, some are forcing the S&P indices to increase their weight. That will force publicly traded funds and indices to pay by buying even more stocks.
“Then the hot money comes out, leaving indexes that hold the bag,” he said.
Tesla Stock Analysts
In a note this morning, analysts at ARK Invest said that during the first half of this year, Tesla’s share of the battery electric vehicle market in China reached 21%, compared to 6% last year. and 2% in 2018. He said it appears that concerns about the automaker’s ability to sell low-end cars in China were misplaced.
Globally, Tesla’s market share increased by about 300 basis points from 23% last year to 26%. ARK Invest analysts said investors used to ask them what will happen to the automaker when traditional automakers start selling electric vehicles. However, the company is now wondering how high Tesla’s market share will be. Their base hypothesis is only 19% in 2024.
Short sellers have continued to bet against Tesla. Data from S3 Partners indicates that Tesla is the largest short position on record for any US company at $ 19 billion.
According to Forbes, Morningstar estimates that Tesla’s shares are 91% overvalued. The firm assigns a fair value estimate of $ 731 to the shares. Analyst David Whiston does not expect the company to reach mass market volumes until the next decade. He noted that “even a pandemic does not cause fear of the market with this action,” adding that it is important to keep expectations of the company in perspective compared to its “limited, albeit now increasing production capacity.”
Disclosure: none.
