Tesla Becomes the 5th Most Valuable Company in S&P 500 with Over $800b in Market Cap

Tesla Becomes the 5th Most Valuable Company in S&P 500 with Over $800b in Market Cap

As Elon Musk scales heights of fortune, Tesla follows. The electric vehicle manufacturer has become the fifth most valuable company in the S&P 500, overtaking social media platform Facebook. Tesla now has more than $800 billion market capitalization.

The Democrat’s win of the Georgia senatorial election cemented the swift run Tesla had had last year, upping its shares more than 15% year-to-date.

Democrat’s control of the Congress means American push for cleaner energy will get legislative backing through the passage of Biden’s clean energy bill that will boost the sales of electric vehicles. On the other hand, it means tech companies are going to face more antitrust scrutiny.

Facebook’s shares dipped 1% in the full trading week of 2021. The Capitol riot by Trump supporters also cast negative view on the social media platform that has been accused of complicity for allowing pro-Trump groups to promote their ideas which fueled the violence on Wednesday.

Tesla’s market value on Thursday crossed $774 billion, pushing Musk’s net worth above $188 billion. At Friday’s session high, Musk’s 21% stake in the company contributes more than $170 billion to his net worth, which belittles the combined market capitalization of General Motors, Ford Motor Co and Fiat Chrysler Automobiles.

Shares rose as much as 8.4% to a fresh record following analyst Chris McNally’s upgrade of the stock to the equivalent of a hold, according to Bloomberg.

He raised his price target on Tesla to $650 from $225, telling clients on a note that “whether we call it valuation confusion or valuation rotation, we have been on the considerably wrong side of Tesla for over year now.”

McNally explained that investors see Tesla as two separate technology companies – one that’s a market leader in electric vehicles and another that has several potential businesses, from full self-driving cars to battery and powertrain developers. While one part of the automaker’s value comes from the revenue it generates, there are two other components that are more market driven and are a bet on an uncertain future and a bet on Elon himself, he said.

“The market is currently ascribing a $100 billion value to Tesla’s self-driving initiatives, and about $80 billion to the potential of it becoming a battery and powertrain supplier, with about $25 billion to $75 billion to a possible energy-storage business that some think could become larger than the car business,” McNally said.

Tesla’s market valuation now stands at $829 billion and is likely going to hit a new height after Biden’s inauguration on January 20. The company reported a fifth straight quarter of profit in October, with plans to improve battery efficiency and halve the cost over the next three years. Delivery of cars made in its Shanghai factory also boosted sales and added to its rising valuation.

Bloomberg noted that investors’ enthusiasm for the stock also got a big boost as analysts and market watchers started predicting its addition to the S&P 500 around mid-2020.

And the astonishing rise has not only made Musk the richest man on earth, it has also turned the limelight to Ark Investment Management, a shareholder in the stock and one of the most vocal and ardent Tesla bulls. Ark has 0.36% shares in Tesla.

However, Tesla still has Alphabet, Amazon, Microsoft and Apple to beat in the S&P 500.

Share this post

Post Comment