Tesla’s Market Value Races Toward $1 Trillion
Tesla’s stock price peaked in October 2021 at $407 a share. Concerns about competition, earnings, and the broad range of activities outside Tesla taken on by CEO Elon Musk, drove shares down to $113 at the start of this year.…
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Tesla’s stock price peaked in October 2021 at $407 a share. Concerns about competition, earnings, and the broad range of activities outside Tesla taken on by CEO Elon Musk, drove shares down to $113 at the start of this year. Since then, shares have surged back to $266, a run-up of 116% year to date. That means its market value is on the way to $1 trillion.
The optimism about the company grows primarily from three things. The first is that Tesla has no challenger in the U.S. or Europe. It delivered 466,000 vehicles in the second quarter. Outside China, no car company can match this. Additionally, Tesla sales in China, the world’s largest car market, have been robust. This is not because other companies have stayed out of the global market. For example, American car makers Ford and GM only sell a few thousand EVs a month, which is barely a rounding number compared to the gas powered vehicles. (See 13 Biggest Electric Vehicle Business Failures in American History.)
Second, Tesla has taken a risk, which appears to have paid off. It has dropped the price of almost all its models sharply. Musk made this decision as a means to add market share. So far, that has worked. It has also caused other EV manufacturers, like Ford, to drop their vehicles’ prices. Ford’s efforts have not worked. Recently, it cut its forecast for EV production this year because of a lack of demand.
Third, Tesla has launched its Cybertruck, a vehicle that the market has anticipated for years. The Cybertruck is Tesla’s version of a pickup. (Also see, America’s favorite pickup trucks.)
Full-sized pickups are the top-selling vehicles in America. Peorders for the Cybertruck currently number nearly 2 million, which equates to a five-year wait period. Not all of those people will wait. However, Tesla may increase its production capacity and some people will decide five years is too long.
Only a few companies have market caps over $1 Trillion. Apple ($3 trillion), Microsoft ($2.5 trillion), Saudi Aramco ($2.1 trillion), Alphabet ($1.7 trillion), Amazon ($1.4 trillion) and Nvidia ($1.1 trillion). Just below these is Tesla at $884 billion. It is at that level, but is gaining.
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
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A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
