The stock market crash of Tesla Inc. has made it one of the most valuable companies in the United States. But in some important ways, the electric car maker is very different from other companies of its size.
Tesla’s shares rose more than 300% last year, bringing the company’s market capitalization to more than $ 800 billion before backing down. The company’s valuation on Thursday was higher than that of the seven largest automakers combined, putting the company shoulder to shoulder with the market giants: Apple Inc., Microsoft Corp., Amazon.com Inc., Google, Alphabet Inc. and Facebook Inc.
Here’s a look at how Tesla got here, and how its arc compares to other companies on the S&P 500:
It became extremely valuable, fast
In 244 days, the time it took Tesla’s market value to grow from $ 100 billion to $ 800 billion significantly outpaced its competitors. The 17-year-old company benefited greatly from investors who embraced CEO Elon Musk’s view of electric vehicles and his notion that Tesla is not just an automaker, but a technology company. Optimism about a transition to electric vehicles fueled record gains in stocks from EV and battery manufacturers last year.
The Federal Reserve’s shares helped to push more investors into stocks and major indices. The central bank cut interest rates and bought billions of dollars in bonds, sending long-term Treasury yields close to zero, while yields from other fixed-income securities rebounded to pre-pandemic levels. With such low yields on securities, investors tend to turn to riskier assets, such as stocks.