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Tesla Inc.’s stock-market tear has made it one of the most valuable U.S. companies. But in some key ways, the electric-car maker is very different from other companies its size.

Tesla’s shares have soared more than 300% in the last year, lifting the company’s market capitalization above $800 billion before retreating. The company’s valuation as of Thursday was larger than the next seven largest auto makers combined, placing the company shoulder-to-shoulder with market giants: Apple Inc., Microsoft Corp., Inc., Google parent Alphabet Inc. and Facebook Inc.

Here’s a look at how Tesla got here, and how its arc compares to other companies in the S&P 500:

It became extremely valuable, fast

At 244 days, the time it took Tesla’s market value to grow from $100 billion to $800 billion significantly outpaced its peers. The 17-year old company has benefited greatly from investors embracing Chief Executive Officer Elon Musk’s vision of electric vehicles and his notion that Tesla isn’t just a car maker, but a technology company. Optimism about a transition to electric vehicles has fueled record gains in shares of EV and battery makers over the past year.

Actions by the Federal Reserve have helped push more investors into stocks and major indexes. The central bank cut interest rates and bought billions of dollars of bonds, sending long-term Treasury yields near zero while yields on other fixed-income securities recovered to pre-pandemic levels. With such low yields offered from bonds, investors tend to turn to riskier assets such as stocks.

Tesla capitalized on ravenous investor appetite for its shares by selling billions in new stock last year.

Investors became incredibly optimistic

A favorite Wall Street valuation metric—the forward price-to-earnings ratio—measures how much investors are paying for a share of a company compared with its expected earnings.

Investor optimism about the prospects of many big technology stocks including Amazon, Apple and Tesla has helped lift their forward price-to-earnings ratios. A high so-called P/E ratio signals that shareholders expect the company to post strong earnings growth beyond the company’s forecast period, generally a year.

Tesla’s shares trade at a price equal to more than 184-times forecasted earnings over the next 12 months, according to FactSet. That’s higher than the average forward P/E ratio for the S&P 500 as of Wednesday’s close of around 22-times forecasted earnings.

Mr. Musk last year said he thought the company’s share price was too high. More recently, however, Mr. Musk rationalized the valuation based on the company’s efforts to develop self-driving technology, which he said would make vehicles more useful and boost revenue.

“I think there is a way to sort of like justify the valuation of the company where it is," he said during the company’s fourth-quarter earnings call in January.

It started making money—but not like other giants

Tesla for years lost money as the company invested in developing new vehicle models and production capacity. It turned a corner in 2020, when it ended the year with a $721 million profit, its first year in the black. While a significant milestone for the company, that profit pales in comparison to the tens of billions of dollars in net income that companies such as Alphabet, Microsoft and Apple earned in recent years.

Tesla has benefited from the sale of regulatory credits to rival auto makers that need to comply with emission-related rules. Such sales brought in around $1.6 billion last year, up from $594 million in 2019. Tesla Chief Financial Officer Zach Kirkhorn said during the latest earnings call that regulatory credit sales wouldn’t be a material part of the company’s business long-term.

Now it plans to get bigger

Much of Tesla’s future performance will depend on the company’s ability to scale up. The company handed over nearly half a million vehicles to customers globally last year, and plans to increase vehicle deliveries by about 50% annually, on average, in coming years.

Even with those increases, Tesla for years would be producing far fewer cars than the world’s auto giants churn out. German auto maker Volkswagen AG, by comparison, delivered roughly 9.3 million vehicles in 2020, and incumbent auto makers are pouring billions into their own plug-in models. General Motors Co. said in January that it aims to phase out gasoline- and diesel-powered vehicles by 2035.

Demand for electric vehicles is also helping boost shares of startup competitors such as NIO Inc., among others. A surge in the value of NIO’s New York-listed shares of around 1,330% over the past year has made the company the world’s sixth most valuable auto maker. Last year, the company delivered 43,728 vehicles.

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