Tesla (Nasdaq: TSLA) has nearly doubled since the beginning of the year. The stock is nearly 35% higher since announcing earnings last week. Although the company's fourth-quarter results were better than expected and it has made progress in manufacturing and delivering vehicles, the company's recent stock gains have been driven by a combination of short-covering and good, old-fashioned greed.
Fourth-Quarter Results
Tesla posted fourth-quarter revenue of $7.38 billion which was above the consensus expectation of $7.047 billion. Earnings came in at $2.14 per share which beat expectations of $1.62 per share. Another encouraging sign for the company was a return to GAAP profitability in the third and fourth-quarters as it generated $1.1 billion in free cash flow. It credited strong sales in the Model 3 and cutting costs across many divisions.
In the fourth quarter, Tesla delivered 112,000 vehicles and produced 104,000 vehicles. Both are above analysts' consensus estimates. Bullish investors and analysts are seeing this development as evidence that the company has turned the corner. It's a far cry from late-2018 to mid-2019 when the stock fell more than 50%, as it eventually bottomed around $180. Currently, it's trading above $900 and up more than 40% in the last two days. In less than a year, sentiment has shifted decisively in the stock.
Crazy Metrics
Tesla's insane run has set all types of stock market records. For one, the stock's total volume multiplied by the stock price which equates to the total amount of money traded in the stock set a new record, eclipsing the previous record held by Apple (Nasdaq: AAPL).
The stock's total float is around 180 million shares. On Monday, the stock's total volume was 45 million which means that about 26% of the stock's total float was traded. This is clearly an indication that these gains are being driven by momentum trading. For Tuesday, the stock's total volume is on pace to cross 60 million shares which would mean that almost 35% of its entire float will be traded.
While Tesla keeps floating higher, other car companies like Ford (NYSE: F) and General Motors (NYSE: GM) are underperforming the market. Both stocks are well-below their 2019 highs and haven't participated in the bullish euphoria. Currently, Ford pays a 6.6% dividend with a 23 price to earnings ratio. Tesla's market cap is $168 billion, while Ford's is $36 billion. Ford is expected to sell around 6 million vehicles in 2020, while Tesla is targeting 500,000.