General Motors? Ford? Nope. Tesla. Thanks a growing product line, decent reviews on new models, and a stock-buying public that loves growth and the future, Tesla is the most valuable– in stock market numbers– American automaker in history.
How is that possible?
This is something of a remarkable achievement given all of the turmoil Tesla has found itself in over the past few years. From a seemingly endless number of production problems to a handful of controversies involving Elon Musk, Tesla has impressively moved past all that in a relatively short period of time.
A genius will tell you it was easy. Look at the share price for some guidance on what’s going on. A stock market roar that makes the rich richer.
Two and a half months ago, Tesla shares were trading at $254. Today, Tesla shares hit the $470 threshold for the first time in history. All told, Tesla shares have jumped by upwards of 85% in just a few weeks. As it stands now, Tesla’s market cap hovers around $84.3 billion, giving the EV maker a valuation that is higher than even Ford was at the height of its popularity.
I checked. TSLA is just under $500 per share. Ford (F) was trading at just over $9 per share, with a market capitalization of $38-billion. General Motors (GM) was almost $35 per share, with a cap of $51-billion. Tesla is worth double Ford and GM combined.
What does that say?
Out with the old, in with the new.
One important caveat here is that stock price on the open market seldom affects a company financials. Unless Tesla is selling stock on the side, the inflated stock price does nothing for the company’s bank account. TSLA is not Tesla, the automaker.
It’s the stock. The two are not the same.
A high stock price does not bring more money to a company. When the stock is sold, money changes hands.
Apple’s earnings per share is almost double GM, at just under $12. Tesla is losing money per share (-$4.77), and losing money on every car sold.
The stock market doesn’t care. Investment has an insidious thread that is all about the future and growth, profit-share be damned. Tesla has a goal of half a million cars per year in China.
Tesla Model S, 3, X, and soon, Y. S3XY? Yes. And sex sells.