As Tesla nears a market capitalization if almost $15 billion, it will surpass major automakers such as Mazda and Fiat.
Tesla’s “current share price assumes the company can achieve unit sales equal to multiple times our current volume estimates and attain a 12.5 percent margin on earnings before interest and taxes,” said John Lovallo, an analyst for BofA Merrill Lynch Global Research.
This means the automaker would have to sell more than 321,000 EVs annually by 2020 and be more profitable than BMW, Mercedes, Audi, Porsche or Bentley. Yesterday, July 9th, Tesla shares reached a record $123.45, but Elon Musk said results for the second quarter ended June 30th, might not be as favorable, due to a fall in sales of the California zero-emission credits.
Tesla, the best performing automotive stock in the world so far this year, fill replace Oracle Corp. in the Nasdaq-100 Index next week. The electric automaker will be added to the index by July 15th, replacing Oracle, which last week announced it is moving to the New York Stock Exchange.
“It’s a coming of age, recognition that a company has market cap and liquidity,” said Sandy Mehta, chief executive officer of Value Investment Principals Ltd. in Hong Kong. “Once the stock joins the index, you will have some buying.”