The year 2020 has been marked by slowdowns. The COVID-19 pandemic has brought the economy to a standstill. Major companies are declaring bankrupt left and right. The stock market has plummeted. Someone forgot to tell Tesla, whose stock has soared over the opening quarters of this year. This week, the tech giant’s stock surpassed $2,000 a share for the first time, marking a 392 percent increase year to date. Of that increase, 130 percent happened in the last six months. And Tesla is knocking on the door of joining the S&P 500. This has triggered an even greater flurry of buying. Another factor driving the rush is Tesla’s announcement of a 5-1 stock split. This means that after August 31, every one share an investor has will be spilt into five shares. The price of each share will also be divided by five. As of today, that would mean each new share would be worth about $420.
What’s driving Tesla’s increase is even more interesting. It is not like they have announced any significantly new products this year. But their cars have surged in popularity, leading to quarters of profitability and an expected revenue of $30 billion this year. This compares to other American car makers Fiat Chrysler, with a projected annual revenue of $100 billion, and Ford and GM who are both projected at $110 billion. That being said, Tesla’s market value is greater than all three of those carmakers combined.
Tesla has now surpassed Walmart in terms of the market value. As of now, only eight companies are worth more than Tesla: Apple, Amazon, Microsoft, Google (owner Alphabet), Facebook, Berkshire Hathaway, Visa, and Johnson & Johnson.
That being said, many Wall Street analysts are betting against Tesla. According to CNN Business, of the 33 analysts that are tracking Tesla, only eight recommend buying it while 15 say to hold it and 10 advise to sell. That is why it remains a major target for short selling by investors.