Shares of Tesla Motors (NASDAQ:TSLA), the Palo Alto, Calif.-based electric-car maker, reached a new closing high Tuesday, amid expectations of a strong fourth-quarter performance and growing speculation that a 2013 meeting with Apple (NASDAQ:AAPL) could lead to an acquisition of the company by the iPhone-maker.
On Tuesday, Tesla's stock closed at $203.70 in New York, a 2.8 percent gain to its highest-ever closing price. The company’s shares have surged more than five times over the past 12 months, Bloomberg reported.
With Tuesday's closing stock price, the market valuation of the Model S sedan company stands at $25 billion, which is worth about $1.1 million for each of the 22,450 Model S cars it sold in 2013. The cars sell for $70,000 to $100,000 apiece, depending on options.
Investors reacted positively after a recent report by the San Francisco Chronicle said that Elon Musk, Tesla’s CEO and co-founder, met with Adrian Perica, Apple's head of mergers and acquisitions, last spring to discuss a potential buyout.
Musk said, in an interview with Bloomberg last year, that an acquisition could be “one of the possible outcomes” for the company, and that a potential buyer would have to have enough cash. Although Musk did not name any particular company at the time, he acknowledged Apple’s position as a cash-rich company. Apple reportedly has approximately $160 billion in cash.
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However, analysts are less optimistic about an acquisition anytime soon.
“There is a lot of pressure on Apple right now to find new markets to grow in. But Apple taking a bite of Tesla seems unlikely,” Craig Irwin, an analyst with Wedbush Securities, was quoted by Australian Financial Review as saying. “I see this as highly improbable. But it is one of the things that drives enthusiasm for the stock.”
According to Thilo Koslowski, an analyst with Gartner (NYSE:IT), Tesla's stock would have gained more than 3 percent if there was any real evidence of a merger with Apple. According to Koslowski, a collaboration between the two companies is a more realistic event than a takeover.
Tesla is scheduled to release its fourth-quarter earnings Wednesday, with investors having an “expectation of positives on the upcoming conference call,” according to Irwin.
How Will Apple's Takeover Of Tesla Help?
According to some market observers, Apple could be interested in Tesla’s battery technology, which could mean the Cupertino-based tech giant could more efficient mobile devices.
Tesla's vehicles are powered by the same lithium-ion battery technology that is used in Apple's portable devices, and the electric-car company has made great advances in developing more efficient batteries, AppleInsider reported.
In addition to better battery technology, an Apple-Tesla merger could also lead to tighter "iOS in the car" integration with Tesla’s vehicles.
While Apple has not commented on the merger rumor, Tesla is expected to say more about Musk’s meeting with Perica. Tesla also is reportedly planning to build a massive battery manufacturing plant in partnership with other companies, and the announcement is expected to come sometime this month.