Tesla Closes negative in a wild speculative trading

On Monday, shares of Tesla (TSLA) rose more than 16% setting a new all-time high of $1,794.99, but gave back those gains and fell into the negative during the afternoon trading. At a point during morning trading, Tesla’s market value increased to $321 billion which made it the 10th-largest U.S. stock by market value, according to FactSet.

As Tesla’s valuation continues to climb higher, there has been growing speculation that the company will soon make it to the S&P 500 list. In spite of Monday’s sharp fall into negative, investors continue to favor the company.

In early July, Tesla beat Toyota to become the largest automaker in the world by market value. For the year so far, the automaker’s stock is up more than 200%. In July alone, Tesla’s stock is up about 38% after the company beat estimates for delivery in the second quarter. The automaker delivered about 90,650 vehicles compared to the 72,000 analysts had been expecting, according to FactSet.

Investors are beginning to see the possibilities of the company reporting a fourth straight quarter of GAAP profits by the time it posts second-quarter results later in the month. The results from its next quarter earnings will determine whether or not the company will be included in the S&P 500.

While Tesla stocks are surging, some analysts still hold a different opinion about Tesla’s valuation, saying that the company’s valuation lies more on the strength of investors rather than its actual worth.

“By buying up Tesla TSLA now, front-runners are forcing the S&P Indexes to give the stock a higher and higher weighting, wrote editor of The Bear Traps Report Larry McDonald in a recent note. “Thus, ETFs/Indexes will be forced to pay up, buying even more shares. Then the hot money exits, leaving indexes holding the bag.”

Analysts like Adam Jonas of Morgan Stanley have also spoken in doubt of Tesla’s “unchallenged dominance” saying that the company’s days were numbered. He also underweighted his rating on Tesla’s stock for a price target of $740, 52% below the price Tesla’s stock closed on Friday. On the other hand, the highest target on Wall Street is $1,525 while the average target us $805, according to estimates compiled by FactSet.