Tesla's stock market value zooms past General Motors’ and Ford’s combined market caps for first time
- The Silicon Valley electric car maker’s stock jumped nearly 5 per cent on Wednesday, closing at a record US$492.14 per share
- Its market capitalisation is now almost US$89 billion, US$2 billion more than the sum of General Motors’ and Ford’s market caps
For the first time, Tesla’s stock market value has eclipsed the combined values of General Motors and Ford Motor.
The Silicon Valley electric car maker’s stock jumped nearly 5 per cent on Wednesday, closing at a record US$492.14 per share and elevating its market capitalisation to almost US$89 billion, or US$2 billion larger than the sum of General Motors’ and Ford’s respective market caps of US$50 billion and US$37 billion.
“It’s clear that Tesla is back to being a story stock and there’s a lot of good news out there,” said David Kudla, chief investment strategist at MainStay Capital Management. “But there are still some problematic issues out there, chief among them is what will its sustained profitability look like, and when will it start to be valued like a car company and not a tech company.”
The progress made by Tesla chief executive Elon Musk has defied short sellers and other traders expecting the carmaker to be overtaken by long-established car companies, including GM and Ford.
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Underscoring investors’ confidence in Musk and his company’s future growth, its market capitalisation has outpaced its US rivals, even as their businesses dwarf Tesla’s. GM and Ford each delivered more than 2 million vehicles in the United States last year, compared with Tesla’s worldwide deliveries of 367,500 vehicles.
While Tesla’s recent progress has cheered supporters, many analysts and investors remain pessimistic about the company’s ability to consistently deliver profit and cash flow.
The company has repeatedly missed targets in recent years and Musk’s mercurial behaviour has come under close scrutiny from financial regulators and shareholders of Tesla.
However, most mainstream carmakers are still ramping up new generations of electric vehicles designed to compete with Tesla’s combination of style, technology and performance.
German carmakers Volkswagen, Daimler and BMW all have promised to launch fully electric premium models. GM’s Cadillac luxury brand is gearing up to launch a series of electric SUVs and cars, while Ford’s Mustang Mach-E electric SUV, unveiled in November, will launch later this year and could compete with Tesla’s Model X or soon-to-launch Model Y SUVs. Ford, GM and other manufacturers have electric pickups in the works to take on Musk’s futuristic Cybertruck.
Rival electric vehicle models from Audi, Jaguar and Porsche have fallen short of Tesla’s driving range between charges and failed to match Tesla’s brand cachet.
More analysts rate Tesla “sell” than “buy,” which is extremely unusual for companies on Wall Street. Eleven analysts recommend buying Tesla shares, while 13 recommend selling and another nine are neutral, according to Refinitiv data.
Shares of GM are about unchanged over the past 12 months, while Ford has risen 10 per cent, both drastically underperforming the broader market, with a slump in China car sales hurting investor sentiment in both of those companies.
