Tesla’s market capitalisation has crossed the $100bn mark for the first time, surpassing Volkswagen’ and will be rewarded for keeping Tesla’s market value for a few months. Tesla’s shares closed at $569.56 in regular trading on the Nasdaq on Wednesday, up 4.09 percent from the previous session.
Tesla shares surged 8.6 per cent to an intraday high of $594.50 in mid-day trading. At Wednesday’s closing price, Tesla’s market value was about $102.66 billion, surpassing Volkswagen’s $99.4 billion, second only to Toyota.’
While Musk’s skeptics doubt whether Tesla’s market capitalisation should exceed last year’s Volkswagen, which sold almost 30 times as much as Tesla’s, its chief executive, Herbert Diess, did not. Arguably the most outspoken CEO of a traditional carmaker, he has been praising Tesla and acknowledging its role in the major changes in the auto industry over a century.
Three months ago, Dees commented that Tesla was no longer a niche carmaker. Last week, at an internal meeting in Germany, he told Volkswagen executives that connected cars would nearly double the amount of time consumers spend online and that cars would “become the most important mobile device”.
“If we see that, then we understand why Tesla is so valuable in the eyes of analysts,” he said. “
Mr Deiss, 61, is rolling out the industry’s most ambitious electric car plan and plans to increase the company’s market capitalisation to the same level as Toyota’s. Toyota’s market capitalisation is $232 billion, still higher than Tesla and Volkswagen combined.
“Tesla has a strong ability to innovate in battery-electric vehicles and connectivity,” Stefan Bratzel, a researcher at the Center for Automotive Management, said in a research note on Wednesday local time. This may partly explain its high market capitalisation. He said the relatively low valuations of traditional carmakers were related to uncertainty about whether they could lead the coming industry shift.
For Tesla CEO and billionaire Musk, Tesla’s market capitalisation above the $100 billion mark is more than just a show of capital. If the company’s market capitalisation remains above this level for some time, he will be eligible for the first instalments in a plan that is either all or no incentive. In theory, the first net prize would be about $346 million.
Tesla’s shares have more than doubled since it unexpectedly reported a third-quarter profit and told investors it had launched its next-generation Model Y electric SUV ahead of schedule and opened a factory near Shanghai.
Tesla’s share price has room to rise as it grows in China, brokerage Wedbush analyst Dan Ives wrote in a note Wednesday. He raised Tesla’s target price to $550 from $370, while maintaining a rating equivalent to holding.
Gary Black, a prominent former Wall Street analyst, said he expects Tesla’s earnings to surpass Those of Volkswagen by 2025, and he believes the forecast for Tesla’s deliveries this year is generally too low. He expects Musk to predict that Tesla will deliver at least 550,000 vehicles by 2020 and announce the launch of model Y in Tesla’s quarterly earnings conference call next week.
Although at least eight analysts have raised Tesla’s target price by more than $100 since the start of the year, the average target price is still well below Tesla’s actual share price. Tesla’s average target price is currently $363.92, with only 10 analysts giving a “buy” rating, 10 analysts giving a “hold” rating and a total of 16 analysts giving a “sell” rating.