But in order to justify its sky-high stock price, the automaker will need to overcome a growing list of challenges.
Shares are down 2% in premarket trading.
Some Wall Street analysts still see a solid case for Tesla’s stock, which is trading at more than 1,100 times its earnings, according to data from Refinitiv.
“While the company is still far from the sort of scale to justify its stock price … production has exploded, and the company expects further expansion with the 2021 completion of its Berlin and Texas factories,” Bespoke Investment Group told clients.
But a closer look at the company’s financial results show that a big reason the company had a strong start to the year is because of its sale of regulatory credits, which brought in $518 million in revenue, and bitcoin holdings.
And while there’s no denying that the company’s car sales could continue to boom this year, there are, as ever, a long list of risks.
Musk said the company should be able to stick to its target for better than 50% growth in sales this year, which would take sales over the 750,000 mark.
To reach that target, the company needs to continue to see strong demand in China, the world’s biggest market. But it faces potential issues there from both consumers and Beijing.
Chinese authorities aren’t the only ones putting Tesla under the microscope. The company is also working with US safety investigators after two passengers were killed in a crash of a Tesla Model S outside Houston.
These challenges come as Tesla faces increasingly fierce competition from upstart rivals like Rivian, as well as traditional automakers like Volkswagen and General Motors that are ramping up their electric vehicle offerings.
Tesla could still rise above the fray — and Bespoke Investment Group notes that the company’s stock is often divorced from its financial performance anyways. But the path ahead for Tesla and its Technoking looks tricky.
Wall Street’s Archegos losses just topped $10 billion
Global banks have now disclosed losses of at least $10.4 billion from the failure of Archegos, a New York-based family office that managed the fortune of investor Bill Hwang. Some smaller banks may also have been hit, and the fallout has taken the shine off an otherwise strong earnings season for global banks.
Is the $2 trillion company club about to expand?
Microsoft is worth just under $2 trillion. Amazon has a market capitalization of $1.7 trillion, and Google owner Alphabet is worth about $1.5 trillion.
Tech stocks have come roaring back in recent weeks, helping to push these Nasdaq stalwarts near record highs.
In fact, tech’s Magnificent Seven — Facebook, Amazon, Apple, Netflix, Alphabet, Microsoft and Tesla— are now collectively worth about $9.3 trillion. That’s a quarter of the S&P 500’s total market value of $37.5 trillion.
“The earnings expectations for the S&P 500 are through the roof for this year as investors expect this great recovery, and tech is a big part of that,” said Daniel Morgan, senior portfolio manager with Synovus Trust Company. “These companies are just so dominant.”
Morgan noted that while some of the tech leaders of the 1990s, such as IBM, Oracle and Cisco, eventually began to post slower earnings and sales growth, that doesn’t appear to be happening with the current industry leaders.
“They are high-growth companies but also defensive because they could still do well if the reopening of the economy doesn’t go smoothly after Covid,” said Chris Gaffney, president of world markets at TIAA Bank. “Some consumer behavior changes during the pandemic may be permanent.”
Also today: US consumer confidence data for April posts at 10 a.m. ET.
Coming tomorrow: Investors will comb through the Federal Reserve’s latest policy announcement for any signs of concern about inflation.