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July 15, 2020 11:15 AM, EDT

Tesla Shares Take a Breather After Historic Run

A man walks past a Tesla Model X electric vehicle on display at a showroom in Hong Kong.A man walks past a Tesla Model X electric vehicle on display at a showroom in Hong Kong. (Justin Chin/Bloomberg News)

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After a torrid rally that saw shares more than double since early May, Tesla Inc. is taking a pause on July 15, even as the broader market rises on the hopes for a coronavirus vaccine.

Tesla shares dropped as much as 2.2% to $1,483.80 in New York on July 15, as the S&P 500 Index rose as much as 1.3%. The electric vehicle maker is now worth in excess of $275 billion, having increased by more than the equivalent of Caterpiller Inc.’s entire market value in just this month.

“There is a risk-off trade happening in Tesla heading into earnings next week with profitability a lingering question,” Wedbush analyst Daniel Ives said, adding that the stock has had a “performance for the history books, the bulls are hedging their bets.”

 

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While the electric car maker’s second-quarter delivery numbers impressed analysts and there are several pending catalysts to point to, such as Tesla’s possible inclusion in the S&P 500 Index and the much anticipated “Battery Day” event that’s expected to debut new technology, even the optimists say they’re hard-pressed to explain the explosive rise in the share price.

“We have made efforts to identify the source of such extraordinary levels of volume, but admittedly, it is not entirely clear to us where the bulk of the volume is originating,” Morgan Stanley analyst Adam Jonas wrote in a note on July 14. “One client said there appear to be ‘bigger forces at work’ in this market and for a variety of reasons the Tesla equity instrument has been anointed the ‘chosen one.’ ”

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