Tesla's Market Value Close to Home Depot's
Tesla Inc. (NASDAQ: TSLA) shares have been on a tear. The company’s current market cap is $253 billion. That puts it just shy of Home Depot Inc.’s (NYSE: HD) $268 billion. Over the past year, Tesla’s stock has risen 493%, while Home Depot shares are up 17%. That is an indication of how quickly the market has increased its opinion of the prospects of the electric car maker.
Home Depot had revenue of $112 billion last year. Its net income was $10.9 billion. The company has 400,000 workers, which makes it one of the largest employers in America. It has 2,291 locations, most larger than a football field.
Tesla had revenue of $6 billion in the first quarter, which is up 32% from the same period a year ago. Of that, $5.1 billion was from automotive operations. Net income was a mere $16 million. If its revenue accelerates at a similar rate for the balance of the year, automotive revenue may reach $25 billion. However, the COVID-19 pandemic could push that number much lower.
Tesla built 102,672 cars in the period, 33% more year over year. It delivered 88,496 cars. Perhaps Tesla’s deliveries may reach 350,000 this year. Once again, the pandemic could hamper that. Contrast that to Volkswagen, the world’s largest carmaker by unit sales, which reached 10.97 million last year.
Home Depot results indicate COVID-19 has not crippled its business. In the quarter that ended May 3, its revenue rose 7% to $28.3 billion. Net income, however, slipped 11% to $2.2 billion. The pandemic may hurt Tesla more than Home Depot.
The argument on behalf of Tesla’s market cap is that the company is the wave of the future in the car industry. But it is hard to claim that Home Depot is a relic of the past. As people improve their homes over the course of what almost certainly will be a long-term hit to the economy, its results may continue to improve.
The nagging concern about Tesla is that it could face rising competition in a period when car sales may slide overall. Home Depot’s shot at strong results over that period are better.