The shares of the United States based electric car maker Tesla has more than doubled in the just the last month and is now trading at almost $890 a share.
Many analysts say that this is a not a normal phenomenon for an established stock. In comparison to the rise of Tesla’s sticks, there has just been a 1 per cent rise in the S&P 500 which is an index the measures the most valuable stocks in the US, in the same period.
The very high rise in stocks of Tesla means that they are in demand. And there are some who are not necessarily happy about that sky-high number. The Saudi Arabia Public Investment Fund being one which had sold off about 99.5 percent of the shares of the company that it held late last year.
Analysts also noted that the current stock price of Tesla is very volatile. After reaching to a value of about $955, the stocks gave up a large portion of the gains towards the end of the market close on Tuesday
At the current stock value, the market capitalization of Tesla is around $160 billion which puts the company beside names such as Salesforce, McDonald’s, Citigroup, and Netflix. The company’s market value is also almost equal to the total gross domestic product of the country of Algeria.
Many would remember the tweet of Tesla CEO Elon Musk in 2018 where he talked about taking the company private at a share price of $420. That number seemed unattainable then but now it seems quite low.
While being unsure of what exactly is driving the share price of the company to rise so much so fast, analysts have pointed out to a number of possibilities or a combination of factors that could have led to this steep rise.
Some have pointed out to the possibility of a very big short squeeze propelling the stock. Short sellers, who make money by betting that the share price of a company would go down, have taken a fancy for Tesla. And this stock is indeed the most-shorted US equity. However when such short sellers see such stocks rise because of factors not under their control, they tend to close their position and purchase the stocks to prevent further losses. That is what is called a short squeeze and could have contributed to the high demand for Tesla stocks and thus its rise.
A very good earnings report for the last two quarters could also have creates a demand for the stock among investors who want to purchase it on the basis of not only past performance but also because of the better than expected forecast issued by the company.
Another reason for the investor enthusiasm could be the announcement by Tesla of delivering its crossover SUV, the Model Y, months ahead of schedule.
Further, analysts also pointed out to the possibility of demand growth for Tesla stocks because of its mainstream popularity that is attracting inexperienced investors. However investors also caution that such a situation could soon become unfavorable for the company. Reports have suggested that new investors were purchasing Tesla stocks at a very high price.
Whatever be the reason, this high stock price has pushed Elon Musk closer to his targeted incentive of $60 billion.
(Source:www.recode.com)
Many analysts say that this is a not a normal phenomenon for an established stock. In comparison to the rise of Tesla’s sticks, there has just been a 1 per cent rise in the S&P 500 which is an index the measures the most valuable stocks in the US, in the same period.
The very high rise in stocks of Tesla means that they are in demand. And there are some who are not necessarily happy about that sky-high number. The Saudi Arabia Public Investment Fund being one which had sold off about 99.5 percent of the shares of the company that it held late last year.
Analysts also noted that the current stock price of Tesla is very volatile. After reaching to a value of about $955, the stocks gave up a large portion of the gains towards the end of the market close on Tuesday
At the current stock value, the market capitalization of Tesla is around $160 billion which puts the company beside names such as Salesforce, McDonald’s, Citigroup, and Netflix. The company’s market value is also almost equal to the total gross domestic product of the country of Algeria.
Many would remember the tweet of Tesla CEO Elon Musk in 2018 where he talked about taking the company private at a share price of $420. That number seemed unattainable then but now it seems quite low.
While being unsure of what exactly is driving the share price of the company to rise so much so fast, analysts have pointed out to a number of possibilities or a combination of factors that could have led to this steep rise.
Some have pointed out to the possibility of a very big short squeeze propelling the stock. Short sellers, who make money by betting that the share price of a company would go down, have taken a fancy for Tesla. And this stock is indeed the most-shorted US equity. However when such short sellers see such stocks rise because of factors not under their control, they tend to close their position and purchase the stocks to prevent further losses. That is what is called a short squeeze and could have contributed to the high demand for Tesla stocks and thus its rise.
A very good earnings report for the last two quarters could also have creates a demand for the stock among investors who want to purchase it on the basis of not only past performance but also because of the better than expected forecast issued by the company.
Another reason for the investor enthusiasm could be the announcement by Tesla of delivering its crossover SUV, the Model Y, months ahead of schedule.
Further, analysts also pointed out to the possibility of demand growth for Tesla stocks because of its mainstream popularity that is attracting inexperienced investors. However investors also caution that such a situation could soon become unfavorable for the company. Reports have suggested that new investors were purchasing Tesla stocks at a very high price.
Whatever be the reason, this high stock price has pushed Elon Musk closer to his targeted incentive of $60 billion.
(Source:www.recode.com)
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