The entire industry watches their movements and the ravings of its CEO, Elon Musk. Musk presents incredible electric cars he announces by the means of a tweet through his personal account. Moreover, he intends for the company to stop trading on the stock market.
This act of him caused the value of its action to skyrocket for a couple of days in a row. In addition, it also opened a debate about what a CEO can/can’t do suddenly and in relation to investors and regulators. Beyond that Tesla’s situation in the market is unique, at least in the automotive industry. Let’s see some numbers.
Few Tesla, many dollars, and a lot of confidence
This is the market capitalization of several groups and car companies, after the market close of August 8, 2018.
Toyota: 207.347 million dollars
Daimler: 73,081 million dollars
Ford: 40,057 million dollars
Volkswagen: 84,698 million dollars
Honda: 55,665 million dollars
Tesla: 63,177 million dollars
General Motors: 53,134 million dollars
And these are the figures for cars sold during the last calendar year, 2017, for each of those groups.
Toyota: 10,163 million cars
Daimler: 2,665 million cars
Ford: 6.254 million cars
Volkswagen: 10,413 million cars
Honda: 5,359 million cars
Tesla: 103,000 cars
General Motors: 6.875 million cars
Perhaps, the figures are striking separately. But, if we join them in a scatter diagram, we can see the absurdity of Tesla’s valuation more clearly. This valuation results from the enormous investor confidence in its future, much more than in its complicated present.
Tesla profit comes from other activities besides the sale of cars as well including energy and software. However, automotive is still the main one. Rest of the groups have other legs in their business such as carsharing or financial services associated with those sales.
What Industry Experts Believe About Tesla Profit?
Marc Fortuño, the collaborator of El Blog Salmón and market expert, holds a different verdict about Tesla. According to him, “Tesla is a company that does not generate operating cash flow, that is, its activity does not generate cash, feeds on promises and survives thanks to the extensions of capital, it’s a bluff.” He sees it as “the antithesis of Amazon”, and considers that its real value is that of its assets. “There are profitable companies, unprofitable companies, and long-term unprofitable companies, and Tesla is one of the last.” He further adds, “it survives through continuous capital increases because it burns money.” Tesla sources have not made any statement in this regard.
José Antonio Madrigal is CEO of Mercalia Global Market and professional stock exchange operator. “The stock market ultimately does not value reality, assesses a company’s future possibility.” Madrigal believes about Tesla’s stock market situation. In the case of Tesla profit, results for 2018’s first half have been the worst in the company’s history. However, its shares have risen nearly 100 dollars in the last seven days, over 30% revaluation. “These expectations are what made Tesla’s stock go from being worth 20 to 400 dollars in eight years.” A revaluation that Musk wants seems impossible. He believes Tesla to achieve the best goals in the coming years, multiplying by 20 in the next 8 years.