Tesla (TSLA) stock reached new highs on Tuesday, closing the market at $1,079.81 per share at a market cap of US$200.278 billion. TSLA has surpassed Exxon Mobil Corp’s (XOM) market cap of US$189.185 billion. Tesla might widen the gap between TSLA and XOM even further soon, especially with Battery Day tentatively scheduled for September.
According to Bloomberg, the gap between TSLA and XOM’s market caps could indicate the world’s willingness to transition to renewable energy sources. Based on Macro Trends’ charts, Exxon and Tesla’s market cap were both affected by the pandemic.
In March, when lockdown and stay-at-home orders were prevalent, XOM’s market cap nosedived from US$252.49 billion in February to US$139.80 billion in March, about a 45% drop. TSLA’s market cap wasn’t immune to the pandemic either. It dropped about 53% from US164.88 billion in February to US$78.24 billion in March.
After Exxon’s decline in the middle of the pandemic, Mad Money host Jim Cramer forecasted that fossil fuel stocks were on their last legs. He said that new and young investors might be changing the market.
Cramer reasoned that sustainability had become a significant factor for traders in an evolving market, placing new energy stocks—like—TSLA in a position for growth. In contrast, oil stocks like XOM could continue to drop unless it adapts to the changing market.
As lockdown and stay-at-home orders began to lift, TSLA’s market cap has steadily recovered and even surpassed pre-pandemic highs. Meanwhile, XOM’s market cap has not recovered its pre-pandemic valuation yet. In June, when world economies started moving again, Exxon’s market cap rose to US$226.65 billion but has continued to drop since.
Tesla’s market cap has been rising since June and may continue to do so, now that the world has realized the value of renewable energy sources. Tesla Energy kept busy during the pandemic by applying for multiple electricity generation licenses in the United Kingdom, Australia, and China.
Thus far, most analysts still don’t recognize the potential of Tesla Energy and the contributions it could make to TSLA. However, Jefferies and Scottish Mortgage believe Tesla Energy could become an industry leader in a world where renewables are poised to replace coal.
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Ma. Claribelle Deveza holds zero share of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.