Why did Tesla surpass Toyota as the world’s most valuable automaker?

Tesla’s market cap topped US$207 billion on Wednesday, overtaking Toyota. How much higher can its share price go?

Tesla Inc is now the world’s most valuable automobile company by market capitalisation.

On Wednesday 01 July, the electric carmaker overtook Toyota Motor Corp's market value when it rose as much as 6% throughout the session to conclude at an all-time high of US$1,138 a share.

In the process, Tesla achieved its highest market cap ever at US$207.55 billion. At the same time, Toyota was trading at a valuation of US$202.70 billion.

Tesla’s profitability remains a question mark

While Tesla shares have stayed in bullish territory for the better part of this year (share price is up 171% year-to-date), news agencies are often quick to point out the fact that the company has yet to turn in a profitable financial year based on standard accounting measures.

Total production and deliveries – two figures Tesla bulls and investors frequently cite as indicators of the automaker’s potential value – were also down quarter-on-quarter in Q1 2020 by 2% and 21% respectively.

Comparatively, production and deliveries of Model S/X and Model 3/Y - Tesla's two key product lines - had risen against previous quarters throughout 2019.

Why do Tesla shares continue to do so well?

IG market analyst Monte Safieddine says this latest rally is further proof of how Tesla’s stock price ‘defies underlying fundamentals and even future concerns that could dent growth and profitability’, including a resurgence of Covid-19 and geopolitical tensions.

‘Whether one calls it a car company or a tech company; so far when it comes to (Tesla’s) share price, fresh record highs are being posted at a time when transportation is dented, and car companies are hurt,’ he writes.

Are you looking to trade Tesla (TSLA) stocks without having to buy and sell the underlying assets? You can explore CFD trading by signing up for an IG account today.

The speculative nature of the stock also means that ‘investors hunting for dividends won’t find Tesla an attractive option’.

‘But that also means price gains will be crucial in enticing investors into the volatile market, for any price increase that is clearly unjustified – if not, speculative - will scare away those looking for a healthy balance sheet and potential consistent returns, especially if liquidity woes return to the financial markets,’ says Safieddine.

Optimistic outlook for the rest of 2020

Despite these setbacks – partly caused by production interruptions across the world amid the Covid-19 pandemic, Tesla remained optimistic about its production figures for the rest of the year.

‘Despite the expiration of various government incentives at the end of last year, Q1 was pacing to be the strongest quarter of deliveries until our operations were interrupted in March,’ said the company in its most recent financial update.

In light of those sudden halts, Tesla expects the production of Model Y in Fremont and Model 3 in Shanghai to be ramped up gradually through the second quarter.

Additionally, it is still committed to increasing production capacity for Model Y at Gigafactory Berlin and Gigafactory Shanghai, with deliveries on track to start in 2021.

While no guidance on its earnings was provided, Tesla did say that it has been ‘diligently managing working capital, reducing non-critical spend, and driving productivity improvements’, adding that it is ‘well-positioned to manage near-term uncertainty’ while balancing long-term plans.

Where next for TSLA stocks?

Having examined these factors, can the stock keep rising in the next few months?

In the immediate, Safieddine projects that there will be some more volatility in Tesla’s share price, with its latest production and delivery numbers due for release on Thursday 02 July – an event he is certain will further entice speculators.

Beyond that, Safieddine says that ‘any and all gains are at risk of an eventual reversal’, especially if US-China relations worsen ahead of the US presidential election in November this year.

He added that this will put a part of Tesla’s future growth at risk, with a likely move back below the US$1,000 level.

On the other hand, while there are aspects of Tesla’s business that might benefit from a worsening economic environment, Safieddine states that price predictions will become trickier with an increasing number of unknown factors.

How to trade Tesla shares with IG

Are you feeling bullish or bearish on Tesla Inc and other Nasdaq 100 stocks? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG’s industry-leading trading platform in a few easy steps:

  • Create a live or demo IG Trading Account or log in to your existing account
  • Enter <Tesla Motors Inc> or <TSLA> in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

React to global volatility

Market volatility continues as coronavirus concerns amplify. Trade with IG and take advantage of:

  • Tight spreads – from just 1 point on major indices, and 2.8 on US crude
  • Guaranteed stops – they’re free to use, and only incur a fee when triggered
  • Round-the-clock assistance – our highly skilled team are available when you need support

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.