Update: as mentioned, the data used was from Google Finance and it now might seems like it’s not accurate. Yahoo Finace shows Tesla’s market cap still being ~$1 billion behind GM’s.
We reported last week how Tesla’s stock price increase following an investment by Tencent led to the company surpassing Ford’s market capitalization.
The company has now surpassed GM’s market cap to become America’s most valuable car company after Tesla started reaching new highs again today.
The stock breached the $300 per share for the first time this morning.
It resulted in a market capitalization of $52 billion, according to Google Finance (using an updated share count), while GM’s market cap was $48.7 billion.
Over the past few months, Tesla surpassed Audi, Nissan, Ford and now GM. Of course, an argument could be made about the company being overvalued or the legacy automakers being undervalued, but as it stands right now, the market believes that Tesla is worth more than those automakers, which is interesting on its own.
The news comes as Tesla CEO Elon Musk was taunting Tesla shorts, people investing against Tesla’s stock, yesterday.
Stormy weather in Shortville …
— Elon Musk (@elonmusk) April 3, 2017
In February, Wall Street’s bet against Tesla reached $9 billion, but the short position has been declining as the stock climbed over the past 2 months.
The last time Musk commented on the short interest on Tesla’s stock, he warned that anyone holding a stock position against the company will have a “tsunami of hurt” coming for them. During the 12 following months, Tesla’s stock price increased by 461% – much of which was attributed to a short squeeze after Tesla reported its first quarterly profit in Q1 2013.
Naysayers are quick to point that Tesla’s valuation is not supported by its revenue, but Musk responded to the claim yesterday:
Exactly. Tesla is absurdly overvalued if based on the past, but that's irrelevant. A stock price represents risk-adjusted future cash flows.
— Elon Musk (@elonmusk) April 3, 2017
Most of Tesla’s future cash flow will come from the Model 3 program, which Musk claimed could generate ~$20 billion in revenue with 25% gross margin. With this new valuation, the market is showing a surprising confidence Tesla’s ability to execute on this goal.
As we reported last week, the comparison with other automakers is becoming less fair since Tesla is trying to own the entire energy process from generation to consumption. It wants its customers to not only buy its vehicles, but to also power them with energy generated through its own products (solar arrays), stored in its Powerpacks and Powerwalls, and charged through its level 2 chargers and level 3 Superchargers.
Therefore, if someone wants to make a comparison, it’s closer to an automaker who also owns an oil company and everything in between, like the refineries and gas stations – such an automaker doesn’t really exist at the moment.
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