Bubble fears as Tesla shares hit record high
SHARES in elon Musk’s Tesla raced past the $900 mark for the first time last night, meaning shares have now doubled in value this year.
Amid frenzied buying, the electric car maker’s stock rose more than 13pc, adding to a rise of 20pc on Monday.
Tesla’s value is now £122bn, more than five times what it was worth as recently as June when shares were changing hands for $177.
The extraordinary rise means Tesla is worth more than three times General Motors, the largest car producer in the US. And Musk has seen the value of his stake jump from £4.6bn to £23bn since June.
The rally has also boosted shares in UK-based Scottish Mortgage Investment trust, one of the top shareholders, to record highs.
Analysts said Tesla retained a big lead over other electric car makers, while its joint batteries venture with Panasonic also turned a profit for the first time. Some observers cautioned that the ‘ insane’ growth of recent months would be difficult to sustain.
But ron Baron, the billionaire boss of the Baron money management empire, whose firm holds 1.63m shares, or 0.9pc of Tesla, said he bought in at around $219 per share in 2014, adding: ‘The company’s business had grown from $2.8bn of annual revenues to $25bn. Now what’s happening, it’s just catch-up. This could be one of the largest companies in the whole world.’
However, Craig Irwin, an analyst at roth Capital who has given Tesla a ‘Sell’ rating, said many investors were flocking to the company simply because it was trendy.
Irwin added: ‘I can’t believe this freaking stock. It’s insane. It’s fear of missing out.’
Matt Maley, chief market strategist at Miller Tabak, said: ‘This is taking Tesla well above a level that would be supported by its current fundamentals. The stock is going to get absolutely clobbered before long.’
Musk, 48, is the biggest shareholder in
Tesla, with 18.8pc of its stock. He is on course for a bonus of at least £263m after getting the market capitalisation to $100bn (£77bn).
The next biggest shareholders include UK wealth manager Baillie Gifford with 7.7pc, Capital World Investors with 5.7pc, Saudi Arabia’s sovereign wealth fund with 4.6pc and the vanguard Group with 4.4pc.
Baillie Gifford’s total stake, held through Scottish Mortgage and other trusts, was worth more than £9bn yesterday. Fund manager James Anderson has talked up the company and said last year that rivals ‘cannot compete with what it is doing’.
More than 14,500 investors piled into Tesla via US-based investment platform robinhood over the past three days. But the surge has proved brutal for short- sellers, who have lost £6.4bn so far in 2020 alone, according to data firm S3 Partners.