Shares of the Palo Alto, California-based electric-vehicle maker have soared 228 percent this year through Monday, blowing past even some of the most optimistic expectations.
“Over the past week, the company is adding to its valuation an amount roughly equal to Ford’s entire market cap on a daily basis,” wrote Morgan Stanley analyst Adam Jonas. “We’re struggling to play catch up here with the valuation.”
Tesla’s market capitalization has increased by $47 billion to $254 billion from July 1 through Monday, according to Dow Jones Market Data. The spike came after the company reported strong delivery and production numbers despite its main plant being forced to close for about half the quarter due to COVID-19. Ford’s market value was $35 billion.
Tesla produced 82,272 vehicles during the second quarter and delivered 90,650, easily outpacing Wall Street estimates. The strong numbers, which came despite Tesla having to close its main plant for about half of the quarter due to COVID-19, have caused an avalanche of revisions to Wall Street price targets.
Tesla’s demand is “holding up better” than its peers, Jonas wrote, adding that volume is only down 5 percent from a year ago and that no other original equipment manufacturer is seeing numbers anywhere close to that level.
Jonas, who raised his price target from $650 to $740, or 46 percent below where they finished on Monday, remains concerned over Tesla’s ability to sustain a profit in China, the health of the auto industry and “inevitable competition” from tech giants like Amazon, Apple and Google.
However, his bull case scenario projects shares could reach $2,070 apiece, up 50 percent from current levels, if Tesla is able to reach 6 million units of volume by 2030.
Tesla’s strong delivery and production numbers also did not go unnoticed by JPMorgan analyst Ryan Brinkman, the most bearish Tesla analyst on Wall Street.
Brinkman on Monday raised his price target by $20 a share to $295, or 78 percent below Monday’s closing level, due to the strong results and a recent note from Tesla CEO Elon Musk to employees suggesting breaking even was “looking super tight.”
He took that to mean Tesla will see a “substantially greater outcome” than what he was anticipating, but warned the results could be boosted by one-time factors such as zero-emission vehicle credit sales or deferred revenue associated with autonomous driving features.
“We remain underweight-rated on TSLA shares, on what we see as lofty valuation coupled with high investor expectations and high execution risk,” he wrote.