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Why shares of Tesla, NIO, and other electric vehicle makers are skyrocketing

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Share prices of electric vehicle makers zoomed on Monday despite little news beyond last week’s impressive quarterly results from leading players Tesla and Nio.

The stock of Tesla, which said last week that it had delivered almost 91,000 vehicles in the second quarter, jumped 10% in midday trading on Monday, hitting an all-time high and marking a 50% gain over just the past month. Meanwhile, Chinese automaker Nio, which has been challenging Tesla in China with futuristic-looking SUVs, saw its shares do even better after reporting record results for June. Its stock rose 23% midday on Monday, also to an all-time high, to just over double what it was a month ago.

The strong sales results from Tesla and Nio amid the COVID-19 pandemic came even as the overall global car industry suffers. Second quarter sales for General Motors, Toyota, and Fiat Chrysler slipped 33% or more. Several analysts raised their price targets on Tesla on Monday, including JMP Securities and JPMorgan.

The big gains in the stocks of electric vehicle makers have pushed their market values sky high, alarming some analysts. They’re concerned that Tesla’s share, in particular, are in bubble territory and that they may eventually pop. “We see a lot more that can go wrong than can go right as the company transitions into Mr. Musk’s greater vision,” Cowen Research analyst Jeffrey Osborne wrote about Tesla. His price target of $300 for the company’s stock is more than 75% below its current price.

The stock price by electric vehicle makers on Monday were even sharper for shares of less well-known and less highly-valued companies. Electrameccanica Vehicles, a five-year old Canadian electric-vehicle maker, saw its stock price jump 48% at midday on Monday, giving it a gain of 238% over the past month. Blink Charging, which runs networks of vehicle charging stations, rose 38% on Monday and 228% over the past three months. Arcimoto, maker of high-speed, three-wheeled electric carts, gained 21% and 204% over the past month.

A few recent high-flyers in the electric vehicle sector were left out of Monday’s rally. Nikola, a newer maker of electric and hydrogen-powered vehicles, lost 8% on Monday, although it is still up 46% over the past month. And shares of Workhorse Group, which is developing electric vans and drones, lost 10%. It’s still up almost sixfold over the past month.

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Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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