Shares of Tesla TSLA 2.93% Inc. crossed the $400 mark for the first time, reaching a level more than twice the electric car maker’s price at a recent low in June.
The stock reached $406.85 during the session Thursday, though more recently it was trading at $405.23. That’s up from a 52-week closing low of $178.97 on June 3, 2019.
Tesla has been a volatile bet. Its shares dropped 14% on July 25, after the company reported a bigger-than-expected loss for the second quarter. It then jumped 18% on Oct. 24 after delivering a surprise quarterly profit, easing fears that Tesla’s pursuit of growth and record production figures would hurt its bottom line.
The stock has become a highflier, luring investors with a story of potentially unlimited growth that has pushed the Tesla’s market value ahead of more-established rivals. Many see Elon Musk as a visionary remaking the industry.
But many investors remain concerned about the company’s profitability, its ability to ramp up production and its financing needs.
Analysts said the recent run-up in Tesla’s share price has been driven in part by enthusiasm about production at a new factory in China, sometimes referred to as Gigafactory 3.
“It looks like Giga 3—from a production standpoint—is going to be stronger than expected in terms of capacity and what they can produce,” said Daniel Ives, managing director and senior analyst at Wedbush Securities. “That’s key to the China bull thesis, which is a key part of the 2020 growth thesis for investors for Tesla.”
Demand from consumers in Europe has also been stronger than expected, he said.
While the car maker’s shares have surged recently, they still lag behind the broader market this year. Tesla has gained 22% in 2019 compared with the S&P 500’s 28% advance.
As the company’s share price has rebounded, the percentage of its total shares outstanding held by short sellers has declined. That percentage was 19% Wednesday, down from 36% at the end of May, according to S3 Partners LLC.
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