Just days after Tesla Inc. (NASDAQ: TSLA) eclipsed Ford Motor Co. (NYSE: F) as the number two car company based on market capitalization, it has passed General Motors Co. (NYSE: GM) to take the top spot with a market cap of $50.9 billion. GM sold just over 10 million cars worldwide last year. Tesla sold fewer than 100,000.
Tesla’s recent stock move was based to some extent to a new price target set by brokerage firm Piper Jaffray. Its new target is $368, up from a previous $223. Tesla’s shares currently trade at $309. Piper Jaffray also upgraded its opinion on the stock from Neutral to Overweight. In its comments, Piper Jaffray said that Tesla’s efforts will “have a captivating impact on consumers and shareholders alike; this advantage will be difficult to replicate.” Tesla’s shares would need to rise 20% to reach the new target.
While many investors question whether a company with such modest sales can carry such a huge market value, optimists say that founder and CEO Elon Musk’s forecast that he can sell 500,000 by the end of the decade is accurate. The upcoming Model 3 will be Tesla’s first foray into mid-priced cars. The first Model 3 is expected to be sold late this year or early next. It will be priced around $35,000, which will make it available to a large number of drivers in America and worldwide. Last August, Tesla had over 400,000 advanced orders for the new car.
Tesla does have competition in the electric car market. Most recently, in the mid-market, GM launched the Chevy Bolt with a price point about the same as the Model 3. A number of luxury car companies, including BMW and Mercedes, are putting their financial, product development and marketing might behind their own electric car initiatives.
Tesla is also considered a leader in autonomous cars. Once again, however, the market is extremely crowded with other manufacturers and high-tech companies like Google.
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