Tesla Inc. will officially join the S&P 500 on Monday and its stock is expected to see unprecedented activity, say industry experts. With a surge of 700% in the last one year, the electric car maker is considered the most valuable company to be added to the American index. With roughly 80% of shares of the company available for trade, Tesla will make for 1.5% weightage in the index.
The stock's meteoric rise this year has also made Tesla the world's most valuable automobile company. According to the reports, Tesla's market cap, at Thursday's closing price, stood at $621.73 billion, which is significantly higher than Toyota Motor Corp's valuation of $25 billion, the now second most valuable automaker in the world.
Wall Street analysts have long been sceptical of Tesla, due to its sudden dramatic rise in share value this year. The 35 analysts tracked by Refinitiv have an average price target of $396.30 per share, which would represent a 36% decline from its current price.
The company's target prices range from a high of $774 per share by Elazar Advisors to a low of $40 by GLJ Research, said media reports.
Some long-term investors say that they still expect to see Tesla post-above-average gains due to increasing adoption rates in the global electric vehicle market and its solar energy business. Moreover, investors remain convinced that billionaire Elon Musk, the chief executive of Tesla, will continue to push the company's disruptive technology ahead of its competitors.
Tesla is expected to earn $2.29 per share on $30.8 billion in revenue during its current fiscal year. Experts are of the view that the stock's inclusion in the S&P will push the forward price to earnings ratio of the S&P 500 index up an additional 0.4 times to near its highest valuation in history.