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Shares of the Palo Alto, California-based electric-vehicle maker have soared 275 percent this year, boosting the company’s market capitalization to nearly $300 billion. That's almost 3.5 times larger than U.S. rivals Ford, General Motors and Fiat Chrysler combined.
Anticipation is high as “profitability this quarter will result in S&P 500 inclusion and is already considered a fait accompli among the bulls,” wrote Dan Ives, a New York-based analyst at Wedbush Securities. Tesla needs a cumulative four-quarter profit in order to join the index.
Tesla’s production and delivery numbers for the three months through June shattered expectations despite the company’s main U.S. plant being shut for half the quarter due to COVID-19. The results juiced investor enthusiasm and prompted short-sellers, or those betting the price of shares would fall, to scramble to close out their positions.
Short-interest dwindled to 13.96 million shares, or a record low 9.47 percent of stock available for trading. Short interest was at 41.4 million shares the year prior.
While Tesla bulls are upbeat ahead of the results, Wall Street as a whole is a bit more skeptical.
Analysts surveyed by Refinitiv expect the company led by billionaire entrepreneur Elon Musk to report a loss of 11 cents per share, on average, with individual guesses ranging from a profit of $1.45 a share to a loss of $2.53. They have an average 12-month price target of $883 a share, or 44 percent below where shares settled on Tuesday.
Ryan Brinkman, an analyst at J.P. Morgan, forecasts Tesla will lose 30 cents a share during the second quarter. He has an “underweight” rating on the stock with a $295 price target due to a “lofty valuation coupled with high investor expectations and high execution risk.”
Meanwhile, Ives, who has a “neutral” rating and a $1,250 price target, says “Musk & Co. must deliver to match euphoric Street expectations baked into the stock.”