Via Financial Times

Tesla jumped more than 17 per cent on Tuesday, extending a vertiginous stock spike that has made it the world’s second-largest automaker by market value.

The stock has more than doubled since December, and rose as much as 17 per cent to $912 in morning trade. It was given a boost after the company last week reported a $105m profit for the fourth quarter, prompting short sellers to rapidly claw back bearish bets on the electric car maker.

Bill Selesky, an analyst for Argus Research said the “crazy” stock rally reflected positive views on earnings and strong demand for the Model 3, one of the carmaker’s flagship vehicles.

“When consumers think about buying an electric vehicle they think about buying a Tesla — that is what is driving the market,” Mr Selesky said. “What will make or break Tesla stock is demand and right now it’s off the charts, especially for the Model 3.”

“While Tesla shares remain on a historic rally post-earnings, the bull party will probably continue in the near-term,” said Dan Ives, an analyst with Wedbush Securities. He said the stock could hit $1,000 if the company successfully taps demand in China for electric vehicles.

Last week, Tesla also announced a week-long delay to production for its Shanghai factory due to the coronavirus. “While the coronavirus outbreak is a tragic outbreak and headline, fundamentally it should have a negligible impact on Tesla’s China growth trajectory,” Mr Ives said.

Line chart of ($) showing Tesla stock hits fresh high

The boom in stock price has hurt the value of short bets against the company. By mid-morning on Tuesday those short positions fell $2.7bn in value, following a $3.2bn drop on Monday, the largest one-day drop in value for Tesla short bets, according to S3 Partners. The paper losses bring the total drop in value of Tesla short positions to $11.6bn for the year.

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Tuesday’s advance gave Tesla a market capitalisation of $161bn, which makes it the biggest carmaker by market value behind Japan’s Toyota at about $227bn.

In recent weeks Tesla surpassed the combined market capitalisation of Detroit’s Big Three — General Motors, Ford and Fiat Chrysler — which have a combined value of $104bn.

Line chart of World's five largest carmakers by market cap, $bn showing Tesla's market capitalisation is second only to Toyota among carmakers