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Tesla’s market cap has grown to over one-third of the market cap of the three big auto regions not including itself. According to economists at Deutsche Bank, there are few reasons supporting this price action.

Key quotes

“Tesla is up +330% since March 18th, and over +760% since June 2019 when it was troubled by bankruptcy concerns. Just 2 weeks ago it surpassed Toyota to become the world’s largest automaker.”

“Tesla’s market cap ($287 billion) has grown to over a third of the combined market cap of the US, EU and Japanese auto indices. Since March, Tesla has added just over 8 Fords or 27 Renaults. In fact, Tesla is over 3 times the size of the ‘S&P 500 Automobiles and Parts’ sector, even though it’s not a member or in the S&P 500 (it would be the 15th largest).”

“According to our US Autos Analyst Emmanuel Rosner, Tesla’s overall share of the global autos market has grown from 0.1% in 2017 to an expected 0.8% in 2020 but remains minuscule. For context, VW is at c.14%. However, Tesla’s market share growth in its areas of focus has been particularly impressive, displacing many incumbents.”

“There are a few reasons for the stunning price action. Electric vehicles are seen as the future, ESG investing is growing, and Tesla is a darling of the Robinhood investment community. We see earnings next week.”