Tesla’s trading volume spiked 1460% from its daily average during Tuesday’s record-shattering rally

FILE PHOTO: Tesla China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai Reuters
  • The value of all Tesla shares traded during Tuesday’s rally spiked roughly 1,466% from its average, according to Bloomberg data.
  • Nearly $US55 billion worth of the company’s stock traded through Tuesday, dwarfing the $US3.5 billion daily average seen over the past year and following a similarly frantic session on Monday.
  • The spike in aggregate trading volume was driven by the stock’s wide range of prices through the day and the higher-than-average trading activity. Tesla stock neared $US1,000 per share before paring some gains.
  • Investors are “struggling to identify a strong fundamental” to back up the automaker’s ascent, Morgan Stanley analyst Adam Jonas wrote in a Wednesday note.
  • Watch Tesla trade live here.

The value of all Tesla shares traded during its massive Tuesday rally was more than 15 times higher than the stock’s average aggregate trading volume, according to Bloomberg data.

Nearly $US55 billion worth of Tesla shares was traded through Tuesday, dwarfing the $US3.5 billion average seen over the past year. The value traded stands at roughly 1,466% higher than the daily average and followed a similarly frantic session on Monday, where nearly $US35 billion worth of shares traded hands.

The spike in value-traded was driven by total trade volume and the wide range in stock price through the day. The amount of shares traded that day equaled 30% of all Tesla stock in public markets. The stock traded as low as $US833.88 and as high as $US968.99, marking an intraday high for the automaker.

Bloomberg News first reported on the jump in trading volume.

The trading spree left Morgan Stanley with “more questions than answers,” bank analyst Adam Jonas wrote in a Wednesday note. Investors are “struggling to identify a strong fundamental” to back up the 60% gain over the past six days, and many traders are comparing the automaker’s valuation to tech stocks instead of other car manufacturers.

“Investor feedback from our discussions has been calm, curious and overall cautious. Folks are asking a lot of questions,” Jonas wrote. Some questions mentioned in the note focused on who’s buying the shares, how Tesla can raise more capital, and where support lies if a correction hits the stock.

The analyst added that the total value of Tesla shares traded even exceeded most of the Federal Reserve’s overnight capital injections, with the average repo operation adding $US50 billion to money markets.

Morgan Stanley maintained its “underweight” rating and $US360 price target, implying a 56% fall from Wednesday’s open.

Tesla stock has more than doubled since early January as a blockbuster fourth-quarter report and spate of analyst upgrades fuel massive gains. The stock’s gains have also shooed away many of its passionate short-sellers, who saw $US2.5 billion in mark-to-market losses on Monday after the stock closed nearly 20% higher. The “short squeeze” driven by traders covering their shorts likely supported the company’s February gains.

Famed Tesla bear Steve Eisman, who was portrayed by Steve Carell in the 2015 film “The Big Short,” told Bloomberg TV on Wednesday he covered his bet against the automaker “a while ago.”

“Everybody has a pain threshold, and when a stock becomes unmoored from valuation because it has certain dynamic growth aspects to it, and has cult-like aspects to it, you have to just walk away,” Eisman said.

The electric car company fell as much as 15% on Wednesday, marking a sizable correction after two days of double-digit jumps.

Tesla shares at $US774.23 per share as of 11:35 a.m. ET Wednesday, up 88% year-to-date.

The company has seven “buy” ratings, 12 “hold” ratings, and 18 “sell” ratings from analysts, with a consensus price target of $US470.23, according to Bloomberg data.

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