Tesla Is Now Bigger Than Bank of America and American Express Combined -- 2nd Update
July 13 2020 - 6:47PM
Dow Jones News
By Gunjan Banerji
Tesla Inc.'s shares are in the midst of a head-spinning rally
that has made the electric-car maker more valuable than many of the
titans of American industry.
The company's shares jumped as much as 16% Monday to $1,794.99
-- before pulling back with the broader market and finishing the
session modestly lower. The stock has more than tripled in value in
2020, climbing in nine of the past 11 sessions.
In comparison, the S&P 500 and Dow Jones Industrial Average
are sitting on losses this year and the U.S. economy has entered a
recession as the pandemic put a halt to business activity around
the country.
How big has Tesla gotten? Tesla's recent surge puts its market
value of roughly $286 billion above that of Home Depot Inc., Intel
Corp. and UnitedHealth Group Inc. The electric-car maker is also
bigger than Bank of America Corp. and American Express Co.
combined, according to FactSet data.
The rally has been driven in part by optimism surrounding the
company's coming earnings report on July 22. Some investors are
expecting the car maker to deliver a surprise profit. That would
make the company eligible for inclusion in the S&P 500 index,
potentially driving even more activity around its shares. At least
$1.6 trillion of mutual and exchange-traded funds track the index,
according to Morningstar Direct data. A company must report an
accumulated profit over four consecutive quarters to be included in
the index. Tesla's profits over the past three quarters have marked
its longest run of profitability so far.
If it were in the S&P 500, it would be the 13th-biggest
company in the index, slightly behind JPMorgan Chase & Co.,
whose market value is about $298 billion. During the day, it was on
track to close in the top 10 U.S. companies by market
capitalization for the first time on record. It ended up losing
$47.59, or 3.1% to $1497.06.
The huge intraday reversal for Tesla's shares mimicked the
tech-heavy Nasdaq Composite, which jumped almost 2% during the day
before ending the day 2.1% lower.
The recent rally is a remarkable feat for one of the most hotly
debated stocks in the market. Equally passionate bulls and bears
have pounced on Tesla -- buying its shares or shorting the stock in
a wager that the shares will tumble. The shares' rapid ascent has
evoked memories of the 1990s tech bubble for some investors. Others
compare Tesla to a technology company such as Apple Inc. that is
sure to change the world.
So far, the bulls are winning.
Write to Gunjan Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
July 13, 2020 18:32 ET (22:32 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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