Tesla Inc‘s shares surged 13% to a record high yesterday, extending their rally to more than 40% in 5 sessions after analysts increased price targets on the company after its strong quarterly deliveries.
The day’s jump rose value of the stock market of Tesla by $30 billion, eclipsing the entire value of Ford Motor Co, currently at $25 billion.
JMP Securities raised its price target to $1,500 from $1,050 after Tesla on Thursday reported higher-than-expected Q2 vehicle deliveries, defying plummeting sales in the wider auto industry since the COVID-19 pandemic slammed the worldwide economy.
“We believe that the question to be considered is not whether the stock is expensive on current valuation measures, but what the company’s growth and competitive position signal about the stock’s potential for the next several years,” JMP Securities analyst Joseph Osha wrote in a client note. Tesla’s annual sales could hit $100 billion by 2025, he predicted.
JPMorgan, which rates Tesla “underweight,” increased its price target to from $275 to $295, while Deutsche Bank upped its target from $900 to $1,000. The median analyst price target for Tesla is $675, compared with its current price of $1,372, as stated by Refinitiv.
Tesla’s solid delivery numbers increased expectations of a profitable Q2, which would mark the first time in Tesla’s history that it would report four consecutive quarters of profit.
Nevertheless, with Tesla’s stock up around 500% over the recent years, many investors believe the rally is unsustainable. The stock is trading at 158 times expected earnings, as stated by Refinitiv, an exceptionally high valuation.
Following Monday’s increase, Tesla’s market capitalization stood at $245 billion. As a result, it led Tesla to world’s most valuable carmaker.