Tesla’s market value is expected to rise by $50 billion due to record deliveries of electric vehicles

By Akanksha Rana and Subrat Patnaik

(Reuters) – Tesla Inc’s market value is expected to rise by about $50 billion as shares of the electric car maker rose sharply on Monday after the company posted record deliveries on strong demand in China, offsetting the impact of a global shortage of auto parts.

The stock rose nearly 8% in premarket trading and was on track to hit its highest price in over a month.

The company said on Friday that it was encouraged by the strong reception of its Model Y crossover in China and was quickly reaching full production capacity.

Analysts remained confident as Tesla still managed to produce roughly the same number of vehicles in the first quarter as in the fourth quarter, despite a global chip shortage that affected the entire auto industry, various supply chain issues and increasing competition.

At least three brokerages have raised their price targets for Tesla stock. Brokerage Wedbush was the most aggressive, raising it by $50 to $1,000, well above the median price target of $712.50, according to Refinitiv data. Wedbush also raised its rating from “neutral” to “outperform.”

“Tesla is executing its duties impeccably. I am not surprised by the strong deliveries,” said Craig Irwin, an analyst at Roth Capital Partners, but added that the stock is “vastly overvalued.”

“Electric vehicles are an exciting thing and Tesla is the market leader.”

CEO Elon Musk’s personal wealth has increased more than eightfold in the past year due to a rise in the company’s share price, even though the company’s production is only a fraction of that of competitors such as Toyota Motor, Volkswagen and General Motors.

According to Refinitiv data, Tesla delivered 184,800 vehicles worldwide in the first quarter of 2021, beating estimates of 177,822 vehicles.

“Great work by the Tesla team!” Musk tweeted on Monday https://twitter.com/elonmusk/status/1379033568882663426. “Special mention to Tesla China.”

Tesla shares were at $713 before the market opened, while other electric vehicle makers, including NIO Inc, Workhorse Group and Xpeng Inc, rose about 3 percent.

“The (EV) sector appears poised to continue its upward trend given rising demand for electric vehicles in China, Europe and the U.S. Tesla’s delivery numbers could be the spark needed to fuel the next rally,” said Jesse Cohen, senior analyst at Investing.com.

(Reporting by Subrat Patnaik and Akanksha Rana in Bengaluru; Editing by Rashmi Aich)