Investor's Corner

Tesla (TSLA) reaches new record valuation after highest close to date

(Photo: Andres GE)

Tesla (NASDAQ: TSLA) reached a market valuation of over $400 billion after gaining an additional 6.42% in stock price during trading on Wednesday. It marks the first time the electric automaker’s market capitalization topped $400 billion after it closed at a record high of $2,153.17.

The company traded as high as $2,166 during trading on Wednesday, marking a new high for TSLA stock.

A sequence of positive events have occurred in Tesla’s favor to drive the company’s valuation to stratospheric heights. Not only has the company received an influx of price target increases from several Wall Street analysts, but the company has used in-house technology developments and software improvements to drive its investment potential to new highs.

The most recent increase in price target came from Philippe Houchois of Jefferies, who more than doubled his outlook for TSLA stock from $1,200 to $2,500 based on the expected developments that could come from the highly-anticipated Battery Day event. Tesla will hold Battery Day on September 22nd, along with its annual Shareholder’s Meeting.

Tesla also will perform a 5:1 split on its common stock on Monday, August 31st, while the distributions of the stock will occur on August 28th. Every stockholder of record on August 21st, 2020, will receive a dividend of four additional shares of commons stock for each share that the investor held on that date.

The stock intends to make shares more available for young investors who are not able to afford the electric automaker’s stock, which has risen over five-fold so far this year.

Tesla’s surge in stock price throughout 2020 could be attributed to several things. One is the company’s increasing demand in the Chinese market, which is thanks to its Giga Shanghai production facility. Tesla manufactures the Model 3 currently in China, which has quickly become the most popular electric vehicle in the market.

Tesla also posted its fourth consecutive profitable quarter in Q2 2020 and managed to beat Wall Street estimates in terms of deliveries once again.

Finally, the company’s upcoming Battery Day has been marked as a possible catalyst for the automaker’s stock. Tesla is rumored to be unveiling a million-mile capable battery pack at the event, and the company is also expected to detail its cell production strategy for the public to see.

Tesla has gone from an unlikely competitor to Wall Street phenomenon in a matter of ten years. After offering its IPO for $17 in 2010, TSLA stock has rallied to over 100 times its value since that time. Impressive in its own right, the company has also surged forward the push to develop sustainable energy and clean transportation by encouraging other companies to join in its mission. Tesla’s rally has brought out encouragement from other automakers who are attempting to enter the market and increase competition in the young, but high-tech EV sector.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

Tesla (TSLA) reaches new record valuation after highest close to date
To Top