Tesla has briefly surpassed General Motors to become America’s most valuable carmaker.
Tesla shares rose as much as 3.7 percent to reach a fresh all-time high of $313.73 in midafternoon trading Monday, boosting its market capitalization to $51 billion. The company was valued at about $1.7 billion more than GM as of 9:35 am in New York, Bloomberg reported.
“Tesla engenders optimism, freedom, defiance, and a host of other emotions that, in our view, other companies cannot replicate,” said Alexander Potter, an analyst at Piper Jaffray Cos., who upgraded the stock Monday after owning a Tesla for seven months and meeting with management. “As they scramble to catch up, we think Tesla’s competitors only make themselves appear more desperate.”
Bloomberg said the turnabout shows the extent to which investors have bought into Musk’s vision that electric vehicles will eventually rule the road. While GM has beat Tesla to market with a plug-in Chevrolet Bolt with a price and range similar to what Musk has promised for his Model 3 sedan coming later this year, the more than century-old company has failed to match the enthusiasm drummed up by its much smaller and rarely profitable US peer.
Even before Monday’s surge, when Tesla overtook Ford in market cap on April 3, some were saying Tesla was overvalued.
GM expects to earn more than $9bn this year and analysts predict Ford will generate adjusted profit of about $6.3bn. On that basis, Tesla is expected to lose more than $950m.
Responding to the criticism at that time, Tesla CEO Elon Musk wrote on Twitter that while Tesla could be considered “absurdly overvalued,” based on past performance, the company’s share price reflects what Tesla could achieve in the future.
@ForIn2020 @waltmossberg @mims @defcon_5 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
Tesla delivered fewer than 80,000 vehicles globally last year to GM’s more than 10m. Musk’s more-affordable Model 3 sedan, scheduled to roll out later this year, will be critical to his ambitions for Tesla to transform from niche carmaker into a mass-market manufacturer.
