American electric car and clean energy company Tesla’s stock soared on the last day, adding around $50 billion to its market cap after the electric carmaker reported record deliveries on strong demand in China, which helped it offset the effect of a global auto parts shortage.
In pre-market trading, the stock jumped nearly 8 percent, putting it on track to reach its highest level in over a month.
The company said that the positive response to its Model Y crossover in China had inspired it and that it was rapidly approaching full production capacity.
Despite a global chip shortage that has impacted the entire car industry, numerous supply chain problems, and increasing competition, analysts remained optimistic, as Tesla managed to manufacture about the same number of vehicles in the first quarter as it did in the fourth quarter.
At least three brokerages have increased their Tesla stock price expectations. According to Refinitiv data, brokerage Wedbush was the most ambitious, raising its price target by $50 to $1,000, well above the median price target of $712.50. Wedbush upgraded its rating from “outperform” to “neutral”.
Private banking company Roth Capital Partners’ analyst Mr. Craig Irwin said that “Tesla is executing impeccably. I am not surprised by the strong deliveries. The stock is egregiously overvalued. EVs are an exciting place to be, and Tesla is the leader.”
Chief Executive Officer, Mr. Elon Musk’s wealth has been boosted by a more than eight-fold rise in the stock’s valuation last year, even though Tesla’s production is a fraction of that of competitors such as Toyota Motor, Volkswagen, and General Motors.
During the first quarter of 2021, Tesla delivered 184,800 vehicles worldwide, exceeding expectations of 177,822 vehicles. Mr. Musk tweeted that “Great work by Tesla team!”, “Special mention of Tesla China.”
Tesla’s stock was trading at $713 before the bell, while other electric vehicle manufacturers such as NIO Inc, Workhorse Group, and Chinese Xpeng Inc were all up about 3 percent.
Mr. Jesse Cohen, senior analyst at Investing.com pointed out “the (EV) sector looks primed to resume its march higher, considering the surging demand for EVs in China, Europe, and the US Tesla’s delivery numbers could be the spark needed to jumpstart the next rally.”
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