General Motors (NYSE:GM) has ceased to be America’s most valuable carmaker. It’s Tesla’s turn to be king of the industry. At least in terms of market value.
One week after surpassing Ford Motor Co. (NYSE:F), Tesla’s market value climbed by 3.3%, printing nearly $52 billion. The name eclipsed General Motors’ $50.89 billion, and moved to within $1 billion of Honda’s.
Tesla Inc (NASDAQ:TSLA) topping Ford and GM is huge news because it signals a major shift in paradigm — from the traditional automobiles of the good old days to state-of-the-art and high-tech vehicles of the future. And it’s not just a shift to robotic, self-driving cars. More significantly, it’s a shift from environment-polluting gasoline-powered cars to clean, electric-powered cars.
Now the question is: how long will Elon Musk’s company reign supreme? The simplest answer — the more the world believes in Musk’s vision that we need electric cars to help clean up our act and protect our environment from further deterioration, the more profitable Tesla will become.
It’s not that other carmakers aren’t trying to catch up, join the bandwagon and come up with their own innovations; it’s just that Tesla’s offerings seem much more attractive in more ways than one.
As Alexander Potter, a Piper Jaffray Cos. analyst and Tesla car owner, elaborated to Bloomberg: “Tesla engenders optimism, freedom, defiance, and a host of other emotions that, in our view, other companies cannot replicate. As they scramble to catch up, we think Tesla’s competitors only make themselves appear more desperate.”
To be clear, though, GM still remains as America’s top auto maker in terms of market share. And in this regard, there’s a relatively wide gap with GM’s market share at 17.3% (10 million car sales in 2016) and Tesla’s at less than 1% (76,000 car sales in the same year).
There’s also the matter of some people saying that Tesla may be a bit ‘overvalued’. And maybe it is, especially based on its past performance. CEO Elon Musk, however, has an auspicious reply to this — that stock price doesn’t reflect a company’s present value. Instead, it’s more a reflection of what the company can achieve in the future. And when it comes to future potential, there’s no doubt that Tesla has a massive arsenal, so to speak.
Morgan Stanley analyst Adam Jonas seems to agree. As reported by CNBC, in a note he recently published, he mentioned a number of markets that Tesla could potentially be a major player in, other than vehicles.
Focusing merely on vehicles, however, while Tesla has its detractors, it’s clear that it has its supporters too. And in between are the consumers who will ultimately determine what direction Tesla will go. That basically means let’s all watch out for how Model 3 fares in the market. Because Tesla’s momentum will depend on that.
Tesla Stock Action
Shares in the $52 billion market cap electric car company fell more than 3 points, or 1 percent, on Tuesday to print below $310. They’re now up 25% on a year-over-year basis and about 46% since January 1. The trailing-12 revenue at Tesla is $7 billion. Tesla’s PEG ratio is (5.30).