Tesla Is Now More Valuable Than The World’s Top Seven Car Makers Combined
If you’re planning on starting a car company, maybe take some tips from Elon Musk, because Tesla is now more valuable than the world’s top seven car makers – combined.
While online shopping and takeaways prompted a steady decline in most of our bank balances this year, Tesla has seen a notable rise, with a current market capitalization of $645 billion.
On Monday, December 21, the company joined Wall Street’s prestigious S&P 500 share index as its sixth-largest member after shares surged to a record high of $695 the previous Friday.
Tesla stock increased partly thanks to a buying spree prompted by its scheduled entry into the S&P 500, because funds that automatically invest in members of the index bought roughly $90bn of stock in preparation, The Guardian reports.
The news comes just six months after the electric car company bypassed Toyota to become the world’s most valuable carmaker. Tesla’s shares climbed to more than $1,100 apiece in June, resulting in a valuation of $209 billion ahead of Toyota’s $205 billion.
As the year comes to a close, Tesla is now worth more than Ford, Honda, BMW, GM, Daimler, Volkswagen and Toyota combined, according to figures from Forbes.
Though it’s been a good week for Tesla, Vitali Kalesnik, partner and head of research in Europe at Research Affiliates, warned it could all soon come crashing down.
Speaking to CNBC, Kalesnik explained that while Tesla is a ‘great company’, the stock has ‘very strong signs of being overpriced’ when considering its sales, car production numbers and other fundamentals.
When we’re looking at the types of assumptions that we need to justify these valuations, one would need very, very aggressive assumptions.
Tesla’s current valuation is in the bubble territory.
JP Morgan Analyst Ryan Brinkman shared similar concerns as he said in a research note, ‘Tesla shares are in our view and by virtually every conventional metric not only overvalued, but dramatically so.’
Earlier this week, Musk revealed he wanted to sell Tesla to Apple CEO Tim Cook ‘during the darkest days of the Model 3 program’. Cook reportedly ‘refused to take the meeting’, but it evidently worked out for Musk, as Tesla’s stock has increased in 2020 by more than 650% and by 800% over the last two years.
Tesla is yet to make a profit for a single financial year, and while some investors have echoed Kalesnik’s worries that the stock may be overpriced, its successful share price indicates the majority of people think it can deliver.
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