How Tesla Gained $4 Billion in One Week
If it seems like incessant talk about Tesla stock has been going on for years, that’s because it has. At the Cheat Sheet, we’ve taken a step back from obsessively parsing the electric car maker’s ups and downs on Wall Street, but we felt the need to weigh in on a particularly big week for the EV company. Starting on August 24 with a price of $202 and a market capitalization of $27.83 billion, Tesla closed the week 23% higher, representing a leap of close to $4 billion in the company’s value.
That’s enough to call it a momentous week for Tesla, and it’s worth a look back at so many sky-is-falling predictions that have been lobbed its way since the stock price first broke $200 in early 2014. Over 18 months later, its stock had seen highs of $280 (July 2015) and lows that began the last week of August.
Momentum quickly began on August 24, when the company had a market cap just under $28 billion, and ended with the triumphant close that saw valuation hit $31.6 billion by the closing bell on August 28. The most obvious boost came from a Consumer Reports rating that gave the Model S P85D a perfect score, its highest in the history of scoring cars.
In fact, the news was dominated by the fact that the P85D actually broke the rating system, initially resulting in an impossible score 0f 103. (Consumer Reports said it changed its criteria to get the Model S back down to 100.)
Throughout periods of volatility, controversy, and continued triumph for Tesla, the company has only offered a single (if ever improving) car, its flagship Model S sedan. How much has the premier electric vehicle changed since the company’s stock went bonkers?
The original Model S Consumer Reports tested was the 60 kWh edition featuring rear-wheel drive, 302 horsepower, and the ability to hit 60 miles per hour in 5.9 seconds. Rear-drive performance (P85) editions offered 470 horsepower and the ability to sprint to 60 in under 4.5 seconds.
Since then, upgrades to the company’s only product include all-wheel drive in every model, 329 horses in the base (70D) model and a maximum 762 horses in the so-far untested P90D. Acceleration to 60 miles per hour won’t take much more than 3.0 seconds in the company’s fastest model (it took Consumer Reports 3.5 seconds in the P85D).
Say what you will of the constant tinkering on a single car, the company’s perfectionist approach has continued to garner it rave reviews in the industry while skepticism about capital investments and profitability issues continues. With the late August rally, Tesla has seemingly bought itself time until the release of the Model X, expected by late September.
The future of Tesla is far from written, as not only the Model X but also the mass-market Model 3 will do more to determine its fate in the next several years. Until the new products arrive, fans of great cars and incredible Wall Street stories have to marvel at a car company that built an incredible reputation (and fortune) on a single, nearly perfect automobile. Setting aside its green car credentials entirely, there have been few stories in the automotive industry with such crossover appeal. The $4 billion week only adds to the legend.