Two weeks ago, Tesla’s market value broke through $100 billion, surpassing VW’s. Tesla’s share price surged on Tuesday, wiping another $150 billion in market value. The BBC asks: Is Tesla really worth that much money? Tesla’s share price has more than tripled in the past three months, and even the most optimistic analysts didn’t expect it. Now that Tesla is the world’s second-largest car company by market capitalisation, why?
Cybertruck Infographic (from: Tesla)
Less than two years ago, the auto industry was still in the dark. Tesla has been losing money annually from the start, and the company has been short of cash because of production delays and huge expenses. Despite the doubts, Tesla’s numbers are getting better and better. So far, Tesla has made two quarters of profit, the Shanghai plant is moving faster than expected and demand is healthy, although there are concerns that demand will cool. The new Cybertruck has 200,000 bookings.
“Investors are becoming increasingly aware that you know that Tesla has a lot of long-term sustainable growth engines, and it’s hard to argue,” said Rolf Bulk, an analyst at New Street Research. “
Analysts at Wolfe Research also said the increase in Tesla’s share price was a bit surprising, but there were plenty of positives to explain the increase. “Tesla’s share price may go up and down, but we still think it has found new room for growth,” analysts told investors in the report. “
Mr Barker believes the recent rally in stocks suggests that some short-shaven companies have been hit, forcing them to close their positions, or buy stocks, which ultimately cause the share price to rise. But S3 Partners, which tracks stock trading, points out that it’s mostly ordinary investors and big companies that have recently bought.
Some analysts have warned of the possibility of another fall in Tesla’s share price, as well as Tesla’s plans to build a new plant in Europe and the temporary closure of its Shanghai plant because of the coronavirus are also worth considering.
Mr. Barker said expectations for the first quarter were not good, something Wall Street has not fully recognized today.
Last year, Tesla delivered 367,500 cars, up 50 percent from a year earlier. Tesla is expected to deliver 500,000 vehicles this year, and analysts believe it could climb to 2 million by 2030. Still, Tesla’s deliveries are far from their rivals.
Volkswagen delivered 11 million vehicles last year, and Toyota sold more than 9 million vehicles in the first 11 months of 2019. Toyota has a market capitalisation of about $230 billion.
Analysts are divided, arguing that Tesla’s electric car technology is leading the industry and that it may take longer than expected. In addition, Tesla has invested in a battery plant that could provide batteries to other car companies in the future.
Adam Jonas, an analyst at Morgan Stanley, said in a recent report that if Tesla were to achieve all its goals, today’s share price would be a veritable one;