Tesla Is Worth 28 Times Ford

By Douglas A. McIntyre Published Oct 30, 9:15AM EDT

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Two differences between Ford Motor Co. (NYSE: F) and Tesla Inc. (NASDAQ: TSLA) explain their widely disparate valuations.
A few years from now, which one will be dying?
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Tesla Is Worth 28 Times Ford — © Production Cybertruck at Tesla Fremont Factory parking lot (CC BY-SA 4.0 DEED) by Lcaa9

Ford Motor Co. (NYSE: F) posted a strong quarter, and its stock rose to a 52-week high of almost $14. That is up 33% this year and takes Ford’s market capitalization to $53 billion. It also has a forward yield of 4.5%.

Tesla Inc. (NASDAQ: TSLA | TSLA Price Prediction) stock is up 14% this year. It has posted mediocre earnings and has a market cap of $1.53 trillion. It does not pay any dividend at all. Yet, it is the 10th most valuable company in the world.

Elon Musk is a controversial figure, and his behavior has almost certainly cost Tesla sales. Bill Ford, on the other hand, is not someone the general population thinks about.

There are two differences between the companies that can, at least in part, explain the wide distance between valuations.

Some investors still believe that electric vehicles (EVs) are the future of the car industry, even though EV sales in most nations, other than China, have been weak. EV believers still see Tesla as one of two industry leaders, along with BYD. Ford, on the other hand, has invested tens of billions of dollars in EVs but has only small unit sales and significant losses to show for it. Ford has warned that if Chinese EVs enter the U.S. market soon, its revenue could be crushed.

The primary difference between the two companies is a message from Musk that Tesla will become one of the largest artificial intelligence firms in the world. It will also be a leader in robotics. If investors wait just two or three years, Tesla’s revenue will show this is true, which will cause revenue to explode upward into the hundreds of billions of dollars. There is not much proof yet that this is the case. (There are even rumors Musk could leave Tesla if he does not get a $1 trillion pay package.)

What is true is that Ford has not convinced investors it has a strong future beyond combustion-engine vehicles. For now, that is a very good future indeed.

The difference in valuations is simple, at least in the eyes of Tesla investors. A few years from now, Ford will be dying and Tesla will be one of the most successful companies in the world.

Tesla Stock Price Prediction and Forecast 2025–2030

About the Author Douglas A. McIntyre →

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.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

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.