Tesla shares end record $240 billion rally
Tesla shares snapped their record 13-day winning streak as the stock closed marginally lower on Wednesday dragged by market technicals and the US Federal Reserve’s hawkish stance.
Shares of the electric-vehicle maker witnessed its longest ever gaining streak, soaring more than 40% that added over $240 billion to the valuation since late May. Its market capitalization surged to near $810 billion.
On Wednesday, Tesla shares closed down 0.7% at $256.79.
The rally in Tesla shares was led by reports of the adoption of Tesla’s charging system by legacy US automakers Ford and General Motors.
This effectively puts 60% of the US electric vehicle market on the North America Charging Standard (NACS) used by Tesla, even though there are other competing charging systems used around the world, Reuters reported.
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Additionally, wider mania for artificial intelligence-related investments coupled with positive news flow from the automaker, including all of its Model 3 sedans becoming eligible for the full US tax credit, supported the upside momentum in the stock.
Tesla share price rally pushed the stock deep into overbought territory. The 14-day relative strength index (RSI) shows Tesla stock has not been this overbought since November 2021, at the height of a broader bull-market and when investor enthusiasm for all-things EV had reached a frenzy, Reuters report said.
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With this rally, the Elon Musk-led company’s forward price-to-earnings ratio (P/E) jumped to 62, surpassing other automakers. Ford and GM have P/Es of 8.2 and 5.6, respectively, according to Eikon data.
Moreover, the 13-day rally in Tesla shares cost short sellers more than $7 billion in mark-to-market losses, taking year-to-date losses to nearly $12.7 billion, according to S3 Partners.
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Updated: 15 Jun 2023, 09:00 AM IST
