First, the data. Tesla, the electric car maker, hit its all-time high on Monday, very close to $ 1,800 a share. In mid-March (when the spread of the Covid-19 unleashed a wave of panic in the stock markets), its stocks were worth $ 361. It is a rise of 396% in four months.
At highs, the company founded by Elon Musk was worth $ 330 billion (€ 277.7 billion). On March 18 its value was $ 66 billion. In other words, investors have considered that, in just a few months, Tesla is worth 264,000 million more (the sum of Inditex, Iberdrola, Santander, Endesa, Telefónica and BBVA).
This appreciation hardly finds precedents in the stock market history. There are many other small companies that have increased in value in less time. But there are far fewer cases of companies that have added more than $ 250 billion to their market capitalization in such a short time. Today it is the thirteenth largest US stock company and, at highs, it became the tenth.
Before a rally Similar investors are beginning to question whether it is sustainable. An example of the doubts that begin to fly over Tesla is what happened on Monday. During the session, the shares shot up 16% (when it touched $ 1,800) and ended up falling 3%. It is such a difference that in terms of capitalization it is equivalent to 55,000 million dollars. More than the combination of General Motors and Fiat-Chrysler is worth. Equivalent to the sum of the 350 smallest companies in the S&P 500.
“Knowing if Tesla is in bubble mode is not easy, although there are disturbing symptoms. The big question is whether the technological improvements that he has patented to manufacture electric cars are so disruptive that they can make him distance himself from his competitors for many years, or if they are not so much, “explains Julián Pascual, president of the fund manager Buy & Hold and knowledgeable about American tech companies.
One of the factors that has most encouraged investors to enter Tesla is that it has started to make profits (after many years burning cash and giving losses). The firm has had three quarters of earnings, although still very small. In fact, in 2019 it still had red numbers of 862 million dollars, despite entering 24.6 billion.
In addition, it has shown that its factories in Shanghai and Freemont (California) are operating at full capacity, and can end 2020 by selling about 500,000 vehicles, a level that was unattainable by many skeptics.
Even the most critical of the company acknowledge that the Tesla Model X or Model Y are high quality cars, and that Musk has shown that he is capable of putting new factories into production at breakneck speed.
Now, how many cars will you sell? What market share can you achieve in a few years? This is where the estimates start to disagree.
For Tesla to maintain the value it now has, it must be assumed that it will become the Apple of the automotive industry. That is, a company with a huge world market share and with a pricing capacity that allows it to sell phones, watches or computers at a much higher price than its competitors.
“There is a part of Tesla’s price that is explained by the pure ‘fan’ movement. Musk has many followers, who consider him a guru, and who believe that he is capable of achieving everything, but honestly, $ 1,800 per share is outrageous, “says Pascual.
As Tesla’s stock has warmed up, bearish investors have begun to emerge around it, betting that in a few months their stocks would plummet. The rise has been so meteoric that most have been left on the road.