Business

Tesla's stock continues its meteoric rise with $129 jump

Posted February 4, 2020 7:25 a.m. EST

— A version of this story first appeared in CNN Business' Before the Bell newsletter. Not a subscriber? You can sign up right here.

More bad news for those shorting Tesla's stock: The company's shares shot up another 20%, or $129, on Monday, bringing its market value to a whopping $140.6 billion.

Toyota is now the only carmaker in the world more valuable than Tesla, even though of the top 10 auto manufacturers, Tesla makes up only 2% of total revenues, according to Bespoke Investment Group.

Driving the gains this time was increasingly bullish sentiment from Wall Street analysts, who are looking for the company's new plant in Shanghai to drive growth. Solid earnings from Japan's Panasonic, which supplies Tesla with batteries, also provided a boost, according to Reuters.

Tesla shares have jumped 233% in the past six months. The company's stock is the most shorted in the United States — though those betting it will fall have had a tough year. Tesla short sellers have lost more than $8 billion on paper so far in 2020, according to S3 Partners, a financial analytics firm, and $2.5 billion on Monday alone.

How a health scare shocked the global oil market

Global stocks, battered by fears that coronavirus will hit global economic growth, are starting to show signs of recovery. But the oil market remains under severe stress, putting pressure on some of the world's top producers to take drastic action.

Enter the bears: Global and US oil prices ended Monday in a bear market, indicating a drop of more than 20% from recent highs. Prices recovered slightly on Tuesday but remain near their lowest level in more than a year. Brent crude, the global benchmark, is trading close to $55 per barrel.

Concerns center on demand drying up in China, the world's biggest oil importer. "People in China just aren't moving around," Steve Sawyer, head of refining at FGE, a consulting firm, told me. Demand for gasoline and jet fuel, he said, "is disappearing."

So far, it's been difficult to assess the extent of the damage. Bloomberg reported Monday that oil demand in China has dropped by 3 million barrels per day, or 20% of total consumption, and that some Chinese refineries may soon reach limits for storing unsold products.

BP Chief Financial Officer Brian Gilvary gave a more conservative estimate on Tuesday, telling Reuters that demand in China has dropped by around 1 million barrels per day.

What is clear is that the oil market is suffering due to excess supply, which means attention is turning to producers.

Representatives of OPEC and its allies will meet Tuesday and Wednesday in Vienna to discuss the impact of coronavirus. There's talk that the cartel could move up its next policymaking meeting, scheduled for March, in order to announce further limits to production. This could help prop up prices.

"It really looks like they're going to be forced into action," Andy Lipow, president of Lipow Oil Associates, a consultancy based in Houston, told me.

If OPEC does nothing and the virus continues to spread, Lipow believes that global oil prices could head toward $50 per barrel. "What's unclear is how long this is going to last," he said. "The expectation in the market is that eventually the amount of cases will peak, a vaccine will be developed — but this could still be several months off."

Alphabet spills its secret YouTube revenue numbers

Google parent Alphabet, in an effort to be more transparent with investors, disclosed closely-held intel on Monday: how much money it brings in from YouTube ads.

Details, details: The company said that YouTube advertising generated $15 billion in revenue in 2019. Ad sales have grown 36% since 2018 and 86% since 2017, my CNN Business colleague Clare Duffy reports.

The disclosure is a big deal for the tech company, which has historically lumped together key segments of its business like YouTube and its cloud services. But it wasn't enough to appease investors, with revenue growth appearing to slow.

Alphabet posted revenue of $46 billion for the final three months of 2019, up 17%. That was below analyst expectations and well below the growth rates above 20% in earlier years.

Shares are down 3% in premarket trading. "This was a big miss in our view," analysts at Bespoke Investment Group told clients.

In the clouds: Google's cloud business also still has catching up to do. In that market, Google is considered a far-off third place competitor, trailing Amazon Web Services and Microsoft Azure. Google Cloud posted full-year 2019 sales of nearly $9 billion, less than what AWS made in the last quarter alone, per Clare.

Up next

ConocoPhillips, Ralph Lauren, Royal Caribbean, Sirius XM and Sony report results before US markets open. Chipotle, Ford, Match Group, Snap and Disney follow after the close.

Also today: US factory orders for December arrive at 10 a.m. ET.

Coming tomorrow: A big week for auto earnings continues with GM results.

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