You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App
Join our mailing list to receive top business news every weekday morning.

Tesla hits another record

As EV mania unleashes sector rally.
Image: Alex Kraus/Bloomberg

Tesla led the unstoppable rally in electric vehicle stocks on Thursday as the sector got more boost from investors’ optimism that the global car market will be dominated by electric cars in decades ahead.

Tesla led gains across the sector, with a 4.5% advance that brought it to an all-time high of $508.61. Lordstown Motors Corp., Electrameccanica Vehicles Corp., Nikola Corp. and Kandi Technologies Group Inc. also rose in morning trading.

Moneyweb Insider INSIDERGOLD

Subscribe for full access to all our share and unit trust data tools, our award-winning articles, and support quality journalism in the process.

Choose an option:

R63 per month
R630 per year SAVE R126

You will be redirected to a checkout page.
To view all features and options, click here.

A monthly subscription is charged pro rata, based on the day of purchase. This is non-refundable and includes a R5 once-off sign-up fee.
A yearly subscription is refundable within 14 days of purchase and includes a 365-day membership.

Click here for more information.

A vote of confidence in the industry came from Britain, which is now looking at its growing fleet of electric cars as a way to create jobs and also balance the power grid, with Prime Minister Boris Johnson calling for phasing out cars fueled entirely by gasoline and diesel by 2030, ten years ahead of the previous schedule.

Later in the day, General Motors Co.’s Chief Executive Officer Mary Barra is expected to announce at an industry conference that GM is ready to spend more than the $20 billion on electric models by 2025 that it had previously budgeted.

The market’s eagerness to fund new EV ventures is also evident in the number of startups that are poised to get listed in the near future. On Wednesday, Bloomberg reported that Electric Last Mile Solutions was in talks to go public through a merger with Forum Merger III Corp., a special purpose acquisition company, according to people with knowledge of the matter. That news followed closely on the heels of Arrival Ltd. agreeing to combine with blank-check firm CIIG Merger Corp.

EV stocks have been on fire over the past few months on confidence that electric cars, trucks and buses will dominate the future of the auto and transportation industries. Tesla’s soaring market value, which dwarfs the combined capitalization of some of the biggest global automakers, only added to that momentum.

“Contrary to the prevalent adage of Tesla and electric vehicles eating legacy auto’s lunch,” if you sum the market capitalisations of all global carmakers from 2016 and compare them versus today’s, “we see EVs have actually expanded the total auto pie by about two times,” Evercore ISI analyst Chris McNally wrote in a note on Thursday.

Tesla, which now commands a market capitalisation of $479 billion, is expected to get even bigger in recent month as its impending addition to the S&P 500 Index will results in a flurry of buying activity from money managers and other investors who closely track the benchmark.

That rally is putting a tough squeeze on short investors in the stock. According to financial analytics firm S3 Partners, the surge in Tesla shares this week has led to $4 billion in mark-to-market losses from short sellers in the stock.

“We should expect continued short covering in Tesla, with the year-long short squeeze tightening even more once indexed long buyers are forced to add Tesla shares to their portfolios by December 21,” S3 Partners said in a note. Tesla short interest currently stands at 6.2% of free float, compared to about 21% in December 2019.

© 2020 Bloomberg

COMMENTS   0

You must be signed in to comment.

SIGN IN SIGN UP

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: