Tesla Inc.'s share price climbed by more than 50 percent since the company announced it would be splitting its stock to make it more affordable. Given the issue's continued rising price Tesla may be forced to split its shares again.
The electric motor-vehicle manufacturer first announced Aug. 11 that it would split its stocks to reduce its per-share price. The company initially planned a four-for-one split but eventually decided on a five-for-one split and their prices accordingly.
Tesla plans to implement the share split Aug. 31. Existing Tesla shareholders will get five new Tesla shares for each old Tesla share they own. The market valuation of the company, which is hovering around $390 billion, will remain the same. As of Friday, Tesla stock rose to a record $2,095.49 a share before closing at $2,049.98.
Analysts are worried about the company's continued stock-price rise. Many said the extremely high valuation is unwarranted given that other large motor-vehicle makers continue to dwarf Tesla in terms of raw sales numbers.
For 2020, Tesla is expected to generate revenues of around $30 billion. While the number may be significant it doesn't hold a candle to the revenues generated by other major manufacturers. Analysts expect both Ford Motor Co. and General Motors Corp. to generate annual revenues of more than $110 billion each this year while Fiat Chrysler Automobiles N.V. is expected to report more than $100 billion in sales.
Tesla's market valuation is now four times as large as the combined market valuations of Ford, GM and FCA.
Of the 33 large institutions that track the stock only eight have a 'buy' rating while 15 have 'hold' ratings and 10 have issued 'sell' recommendations. Average price targets have remained just below $1,300 a share with the highest targets at $2,000 a share.
Even with all of the technical and fundamental analysis Tesla has defied standard investment behavior. Die-hard fans say that Wall Street has been wrong on several occasions about the stock.
