Tesla Inc. (TSLA) - Get Report shares surged to a fresh all-time high Wednesday, lifting Elon Musk's clean-energy carmarker past the $100 billion mark and extending a run that has taken his company past the likes of Ford, General Motors and Volkswagen in less than a decade.
Tesla shares have more than doubled over the past six months as analysts and investors re-set profit expectations for the electric car market's industry leader amid stronger-than-expected quarterly delivery figures, the ongoing expansion of production facilities in China and a more disciplined approach to communications and stewardship from founder and CEO Musk.
"Our 40-year historical screen suggests it is rare but not unprecedented to see a large cap stock double within 6 months – we count about 3 cases a year on average, excluding the tech bubble and recovery from the Great Financial Crisis (GFC)," said Bernstein analyst Toni Sacconaghi. "However, it is extremely unusual in the autos and industrial sectors, which could explain why auto investors appear to be more surprised than tech investors."
"Specifically, we count only 3 cases of this ever happening in autos – Ford and Daimler in the aftermath of the GFC, as well as Fiat Chrysler in 2017," he added.
Tesla shares were marked 8.12% higher Wednesday to change hands at $591.78 each, an all-time high that would lift the stock to a market value of just over $106.6 billion and extend its rise since the June 3 nadir to around 230%.
Tesla's market value, in fact, overtakes that of Volkswagen AG at the start of trading later today, with Europe's largest carmarker languishing around the $100.7 billion mark. Japan's Toyota Motor Co., (TM) - Get Report however, remains the world leader with a market value of around $198 billion.
Execution has been a major part of Tesla's recent surge, with the Palo Alto, California-based carmaker topping he lower end of Wall Street forecasts for 2019 deliveries with a full-year tally of 367,500 units, lead by the sale of 92,500 Model 3s over the three months ending in December.
It has also officially opened its $2 billion Shanghai 'gigafactory, launched a new electronic truck, closed the purchase of land for a European factory on the home turf of Volkswagen, Daimler and BMW in Brandenburg, Germany and began delivering its flagship Model 3 sedan to customers in China, the world's biggest car market, earlier this month.
Analysts have also helped Tesla's record run. New Street Research boosted its price target to a Wall Street high of $800 per share yesterday, citing the electric vehicle maker's technology dominance, strong demand for its premium cars and overall execution.
Last week, Oppenheimer's Colin Rusch nearly doubled his existing price target, which he set in late October at $385 per share, to $612 per share in a client note that argues the group has reached "critical scale" to support sustainable free cash flows.
He also suggests the Musk-controlled company could pose and "existential threat" to transport companies that do not have the ambition or the ability to innovate at Tesla's torrid pace.
That said, Tesla remains one of the most shorted stocks on Wall Street, with bets against its continued rise rivaling that of Apple Inc. (AAPL) - Get Report - which the market values at more than $1.2 trillion.
Last week, Morgan Stanley analyst Adam Jonas lowered his rating on Tesla to 'underweight', citing concerns for the sustainability of the stock's six-month surge, but lifted his price target on the stock by $110, to $360 per share.
Berenberg's Sacconaghi, however, cautions that the near-term risk/reward story on Tesla is "skewed to the downside".
We acknowledge it is difficult to call the top on a rocket ship – as our analysis has shown, just because a stock has gone up doesn't necessarily mean it goes back down – but we note expectations for Tesla appear to be rising materially," he said.
"We remain cautious on the Shanghai Gigafactory ramp dragging down margins in Q4 and Q1, seasonal softness affecting Q1 demand following subsidy eliminations in the U.S. and the Netherlands, and the potential for Model 3 cannibalization as Model Y ramp," he noted.