High-flying Tesla joins S&P 500; skeptics say buyer beware

DETROIT (AP) — In the middle of last year, Tesla's losses were piling up, sales weren't enough to cover expenses and big debt payments loomed. The situation was so bad that one influential Wall Street analyst raised the possibility that Tesla wouldn't be able to pay its bills and would have to be restructured financially.

Since then, the electric car and solar panel maker's shares have skyrocketed, rising over 700% this year alone. Monday morning it will join the prestigious S&P 500 index with a market value of over $600 billion. It's the largest addition in the history of the index.

Tesla's rise to become the world's most valuable automaker and rank among the top 10 biggest U.S. companies is a surprising accomplishment considering that the company lost $1.1 billion in the first half of 2019. The increase is so stunning that even CEO Elon Musk has said the shares are overpriced.

Global sales hit a record of almost 140,000 in the third quarter, debt has been reduced with proceeds from stock offerings, and Musk’s company is building two huge factories to make new vehicles and satisfy demand. Intensely loyal followers have invested billions and Musk has become the world's third-richest man, according to Forbes.

Tesla and Musk have for years engendered strong divisions on Wall Street, and the rise from near-collapse to an astronomical valuation is no exception.

Many investors who drove Tesla's value higher are individuals who bought the stock after a five-for-one split reduced the price of a single share last summer. The bulls are largely betting on the company's future and point to five straight profitable quarters, rising sales, and world-leading battery and software technology to justify their bets.

Bears, including short sellers who have lost millions betting...