Tesla surged after bullish comments from investor Ron Baron helped send the stock to parabolic heights, similar to the type of trading in late-1990s tech stocks.
The stock closed 13.7% higher Tuesday at $887.06, after touching $968.99 in earlier trading. Baron said Tesla could have $1 trillion in revenues in the next decade.
Source: Bespoke
Research firm Bespoke Investment Group said the stock's big gain is rivaling some of the largest bubbles in stock market history, including the tech dot-com bubble and housing-related shares in the run-up to the financial crisis.
"Tesla's bubble looks a lot bigger than biotech, homebuilders, or the aggregate Tech sector's bubble," wrote Bespoke analysts. "We don't know how high Tesla's shares will get, but with the company valued at a premium to the vast majority of the largest stocks on the planet, it's hard to take it seriously as something other than a combination of speculative excess and positioning."
Bespoke said those types of moves often run longer than expected, but past parabolic surges have run out of steam, ending in dramatic sell-offs.
"Tesla...has more than quadrupled since September in an epic move higher that included an earnings beat, a short squeeze, and a pile-on from the enthusiastic fans CEO Elon Musk has always attracted," Bespoke wrote.
Tesla is up 112% for the year so far.
"Taking either side of this trade at this point is a dangerous game, so we'd keep any trades small or simply enjoy watching the drama from the sidelines," the Bespoke analysts wrote.