Tesla Stock with Wings... Doubled in a Month

Up 112% just this year

From $430 at the beginning of this year to $887.06

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jaehee] Tesla's stock price has doubled in just one month. This represents a 112% increase since the beginning of the year. At the end of last year, there were expectations that Tesla's upward momentum would slow down after Saudi Arabia's sovereign wealth fund, one of Tesla's top five shareholders, sold nearly 99% of its shares. However, Tesla has unusually continued its rally, drawing attention to the reasons behind this trend.

According to the New York Times (NYT) on the 4th (local time), Tesla's stock price was in the $430 range at the beginning of January this year but has now risen to $887.06 (based on the previous day's closing price), more than doubling. As a result, Tesla's 2020 profits have increased by over 110% in just one month.

Notably, the Nasdaq index hit an all-time high both intraday and at closing on this day, largely driven by Tesla's soaring stock price. Tesla rose about 14% that day, surging 23% intraday to surpass $968.99, marking an all-time high. On the previous day, the 3rd, Tesla's stock price also rose 19.9%.

It is unusual that Tesla's stock price has risen even after Saudi Arabia's Public Investment Fund (PIF), one of Tesla's top five shareholders, sold 99.5% of its 8.2 million shares held at the end of last year, leaving only 39,151 shares. CNBC had reported that "Tesla would not gain a rally in 2020."

However, analysis suggests that hedge funds that shorted Tesla stock are buying back shares, intensifying the upward trend. According to research firm S3 Partners, 26.32 million shares (about 17%) of Tesla's float have been shorted.

Moreover, Tesla's surprise strong performance in the fourth quarter of last year is driving the stock price increase. Tesla recorded $7.38 billion in revenue in Q4, exceeding Bloomberg's forecast of $7.06 billion. Tesla delivered a record 112,000 vehicles in Q4, posting profits for two consecutive quarters. Last year, Tesla's operating expenses fell by 7%, while sales and delivery results increased by 13% and 50%, respectively.

Furthermore, the news that Tesla's first overseas production plant, the Shanghai Gigafactory, began operations at the end of last year, and that it plans to build its first Gigafactory in Europe this year, has acted as a positive factor.

Investment management firm ARK also projected that Tesla's stock price could soar to $7,000 in five years, based on expectations that Tesla will increase profits, reduce costs, and build a fully autonomous taxi network.

Meanwhile, Tesla's founder and CEO, Elon Musk, jumped more than 10 ranks from 35th to 22nd among the world's richest people at the beginning of this year. Musk's current assets are estimated at about $41 billion (approximately 48.667 trillion KRW).