Investor's Corner

Tesla is now more valuable than Volkswagen and BMW combined

Tesla stock closed at a record-high of $780 per share on Monday, pushing the California-based electric carmaker’s valuation to $140.591 billion and above the market cap of Volkswagen and BMW combined. Tesla’s latest record-setting valuation further solidifies the Elon Musk-led company’s position among legacy automakers, eclipsing Volkswagen’s market cap of $90.672 billion and BMW’s $45.894 billion.

Earlier this month, Tesla overtook Volkswagen as the second most valuable carmaker in the world. The latest valuation widens the gap between the two manufacturers to roughly $50 billion on Monday.

Wall Street’s prediction on the further upside of TSLA gave the price some boost. Argus Research upped its price target for the electric carmaker to $808 from $556 citing revenue growth from Model S and Model X and the strong demand for the Model 3.

“Despite past production delays, parts shortages, labor cost overruns and other difficulties, we expect Tesla to benefit from its dominant position in the electric vehicle industry and to improve performance in 2020 and beyond,” said Argus Research analyst Bill Selesky.

ARK Investment Management also updated its valuation model and believes the stock could hit $7,000 per share or even a best-case scenario of $15,000 by 2024.

For Gene Munster, managing partner of Loup Ventures and a known Tesla Bull, he attributes the bright future of Tesla to its head start against automotive giants with deeper pockets.

“The thesis for Tesla’s business miracle is rooted in the handful of years that the company operated with effectively no competition. Tesla has nearly a decade head start in EVs as other automakers under-invested in the space,” Munster said.

Tesla has a commanding presence in the mid-luxury sedan market that’s wreaked havoc on BMW and Mercedes Benz who have both been slow in delivering a viable electric vehicle for the everyday consumer. With Tesla’s investment into fun yet useful over-the-air features that have been otherwise foreign to traditional automakers, the company will continue to see unparalleled growth in the industry.

Tesla chief Elon Musk will host an AI hackathon party at his house to accelerate the development of Tesla’s full self-driving capability and Autopilot feature, and most likely fish for new talents to join the company.

Tesla will start the delivery of the Model Y this March, way ahead of schedule. The much-awaited crossover also has an updated EPA range of 315 miles from the original rating of 280 miles.

The Silicon Valley-based carmaker is also getting closer to laying the first bricks of its first factory in Europe, Giga Berlin. It also recently applied for subsidies for its battery cell production in Grunheide, which will help keep costs optimal. In China, Tesla’s factory is offline at the moment due to the ongoing novel coronavirus pandemic but Tesla China is continuing its push and answers questions from potential customers via social media.

If Tesla keeps on track and execute flawlessly, we can only expect to see analysts and the automotive world get more bullish and the long-term expectations of skyrocketing stock prices will highly likely come true.

As for the short sellers, losses amounted to $2.5 billion on Monday or about $8 billion since the start of 2020, according to data power company S3 Partners.

Tesla is now more valuable than Volkswagen and BMW combined
To Top