Electric vehicle maker Tesla Inc. (NASDAQ: TSLA) hit a high on the stock market yesterday, closing at a new record of $2,153.17, for a market cap of $401.2 billion.
The company’s stock has been rapidly growing this year, and it is now preparing for a stock split to keep its shares competitive with the wider market. Once the most shorted stock on the market, it is now a legitimate growth pick.
Tesla’s Profit Generated Goodwill With Investors
Tesla surprised analysts and investors in July with a better than expected earnings report. The company reported earnings of $2.18 per share, from revenue of $6.04 billion. The Coronavirus Pandemic hasn’t had a major impact on the company. Sales in the second quarter were only down 5% compared to last year.
The company is still enjoying high demand for its electric vehicles, but parts shortages and supply-chain issues have stunted output in 2020. These issues can be linked to temporary shutdowns at its Chinese and American factories, and they are likely to be short-lived. Both of the company’s main factories are operating again, and it is still planning a new development in Germany, which will give it tariff-free access to the vast European market.
Positive financials have attracted new investors. The potential of the company is also a bonus. No other car manufacturer has the same level of experience in electric vehicles as Tesla does. It is continually developing manufacturing expertise and more efficient processes.
Data from cars on the road is also helping the company. It has more usable telemetry and data for computer-assisted and self-driving vehicles than its competitors. This will help the leadership and development teams to make better decisions about upcoming models and features. It will also help the company to corner the market quickly if self-driving vehicles become viable in the United States.
Stock Split is Likely to Boost the Market Cap
Tesla’s incoming stock split will convert every share into four, dramatically lowering the price of entry for new investors. This is likely to boost trading volume in September and beyond. The stock price will fall, but existing investors won’t lose anything, and the market cap is only likely to go upwards from there.
Tesla is now the world’s most valuable automaker, and it has competitive advantages that could help it to maintain and even expand its position in the years to come.
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