TESLA GOES ZOOM
Stock still climbing as results approach
Tesla’s stock continued to accelerate at breakneck speeds on Monday before investors abruptly slammed the brakes on concerns that its California factory could be re-shuttered due to COVID-19 spikes in the Golden State.
The electric-car company’s stock surged as much as 14 percent in early trading as excitement grew around its upcoming earnings report. If it posts a profit that meets generally accepted accounting principles, it will have four consecutive profitable quarters under its belt — a key metric for being added to the popular S&P 500 stock index.
“Really that’s the only number that analysts are looking at in the upcoming earnings release,” CFRA Research analyst Garrett Nelson said of the July 22 earnings report.
A spot on the S&P 500 would be a big win for Tesla’s outspoken CEO Elon Musk, who has watched his car company’s stock price skyrocket 258 percent since the coronavirus pandemic hit the US.
The stock hit a new intraday high of $1,794.99 a share before California Gov. Gavin Newsom announced that he would be shutting down bars and indoor dining in the state.
The stock ended the day down 3.1 percent, to close at $1,497.06, on fears of another shutdown of Tesla’s Fremont factory, which is responsible for about 70 percent of its vehicle production, Nelson said. “California is far and away their largest market,”
Nelson said. “If California is being forced to shut down again, there’s going to be a lot less people looking to buy new vehicles.”
Tesla’s recent decision to discount the price of the Model Y SUV just four months after its release is another potential red flag for investors, Nelson added. But try telling that to Tesla’s investors, who keep sending the stock to new heights at a time of record unemployment.
Tesla, which is up nearly 10 percent in the past week and more than 50 percent in the past month, now boasts a market valuation of $277 billion — greater than Ford and General Motors combined.
“It’s anyone’s guess trying to explain the day-to-day movement,” Nelson said. “Tesla kind of has a mind of its own.”