Tesla's shares jumped 17% on Thursday taking its market capitalization to $53 billion. This makes Tesla the most valuable US automaker, surpassing General Motors' market cap of $51 billion. The electric carmaker's shares soared following its surprise third-quarter earnings.
Tesla's Chief Executive Officer Elon Musk had earlier promised that the company would bounce back and register a profit in the third quarter. The company's shared rose 18% to $301 in the pre-market trade. The company on Wednesday reported a quarterly profit riding on improvements in operating efficiency and reduction in material and production cost.
Tesla was the most valuable US carmaker but was overtaken by General Motors. If Tesla succeeds in holding on to this jump, the company will end the day once again as the US's most valuable carmaker in terms of market capitalization. Also, the company's $1.8 billion junk bond, which is due on August 2025, soared 3 points in price following its quarterly results, its lowest yield since March 2018.
Production and financial targets
Tesla's potential as a carmaker was being questioned for quite some time now, with the company failing to meet both production and financial targets quarter after quarter. The company's shares are still down more than 30% from its all-time high of $390 in early 2018. Although it is too early to predict if the company will be able to sustain this show in the long run, Elon Mask is leaving no stone unturned to get his company back on its feet. Tesla has also been struggling to meet
However, its plans of a production unit in China may finally help the company. Musk on Wednesday announced that the company has started trial production ahead of schedule this month at its new Gigafactory in Shanghai and has already started producing full vehicles, from body to paint to general assembly."
Musk also said that the new factory is also 65% cheaper for producing its Model 3 cars and the new facility may become the company's new normal. The Shanghai factory was set up in a record time. It was only 10 months ago that Tesla broke ground on the plant.