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Old 4th April 2017, 18:01   #1
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Default Tesla overtakes Ford in market value after stocks climb 5.8%

US-based electric car manufacturer Tesla has surpassed Ford in market value, after the former's stocks recorded a growth of 5.8 %, taking its market value to US$ 48.2 billion. This valuation is around US$ 3.1 billion more than that of Ford. The stock hike has made Tesla the second largest American car maker in terms of market value, behind General Motors.

The increase in Tesla's share prices came a day after the company announced that it had shipped 25,000 units in the first quarter of 2017. This sales figure surpassed the expectations of market analysts and reflected Tesla's growing popularity and market share. Interestingly, while Ford sold a lot more cars in comparison to Tesla, it didn’t manage to meet market projections. This resulted in the stock tumbling down and thus helping Tesla's market capital to surpass it for the first time.

It must be noted that in all parameters except market value, Ford surpasses Tesla by a huge margin. While Tesla sold 25,000 cars worldwide in the first quarter this year, Ford clocked nine times this sales figure in the last month in the US market alone. Ford had registered an annual revenue of US$ 151.8 billion last year compared to Tesla's corresponding figure of US$ 7 billion.

However, Tesla is considered to be an evolving company. Shares of the electric car maker behave a lot like technology stocks, which rise as per the company's potential to make a mark in the near future. A major reason behind the recent rise in Tesla's valuation can also be considered to be the upcoming official introduction of the Model 3, which is the company's most affordable product and is expected to increase the manufacturer's global sales significantly.

Source: Bloomberg

Tesla overtakes Ford in market value after stocks climb 5.8%-1x1.png
Link to Team-BHP News

Last edited by dZired : 4th April 2017 at 18:03.
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Old 4th April 2017, 18:38   #2
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

I did not understand who calculates this Market capitalization numbers and on what basis?
May be finance experts can share.
From the same article, it is clear than Ford completely eclipses Tesla.

Quoting from the above article:
Ford, which reported net income over the last five years totaling $26 billion, towers over Tesla on most metrics. Tesla lost $2.3 billion during the same five-year span. Revenue was $151.8 billion last year for Ford, compared with Tesla’s $7 billion.

Tesla sold about 40,697 vehicles in the U.S. last year, according to registration data compiled by IHS Markit. Ford delivers that many F-Series trucks about every three weeks.
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Old 4th April 2017, 18:58   #3
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Quote:
Originally Posted by abhishek46 View Post
I did not understand who calculates this Market capitalization numbers and on what basis?
May be finance experts can share.
From the same article, it is clear than Ford completely eclipses Tesla.
I understand your sentiment so let me try to give it a shot:
  • Ford represents the past (fossil fuel consuming IC engines) while Tesla represents the future (alternatively powered autonomous vehicles). Stock market bets big on the future.
  • Tesla for all practical purposes is a technology company and its valuations are more in line with a tech start-up (think Uber, AirBnB, Facebook) than a traditional manufacturer.
  • Elon Musk is *the* visionary of our time (related thread). Charismatic leadership plays a big role in market value.
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Old 4th April 2017, 19:22   #4
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Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share.

The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures.

So it's a pretty simple and well established calculation. What it represents is a bit in the eye of the beholder. But as it is based on the value of the shares you could argue it says something of how investors feel about the future of this company.
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Old 4th April 2017, 19:46   #5
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Even after taking the future potential of Tesla in account, the prices are in bubble territory.
There is a long way to go before we write off oil & gas. Of the top 10 companies in market by market capitalization, 5 are in petroleum industry (rank 3,4,5,6 and 10, reference fortune 500 list)
Tesla is small (relatively), it is burning cash and its Achilles heel is battery technology which is not evolving at a pace to make it the preferred choice (relative to gas) anytime in the near future.

Remember the Air-deccan & the Saharas of the world? India was flying, it was the future mode of travel (and still is). Finally after much cash-burns and bankruptcy, sanity returned to the industry and people were ready to pay a fair price for the ticket.
There is lot of money flowing in this world for euphoric bubbles to keep popping every now and then.
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Old 4th April 2017, 20:20   #6
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Ever since I read this news item yesterday, I have been doing some digging -

1) Sales are estimated to go up from $7 billion now to $80 billion over the next 10 years. That's a sales growth of over 26% per annum, powered by sales of Teslas at much lower price points.

2) Margins are expected to be around 12% (net profit of $10 billion in 2027). At current valuations, investors are paying 5 times CY2026 expected earnings. Those are insane valuations (assuming the estimates are right)

3) However, the above estimated earnings are for car business only. Tesla wants to be an "energy" company. SolarCity acquisition & investments in battery manufacturing is a step in that direction. However, since this business does not have a BRAND PULL of a Tesla car, this is considering to be a risky investment.

4) Future range of 1000 kms per charge & super-fast charging is likely to improve Tesla's practicality.

Tesla overtakes Ford in market value after stocks climb 5.8%-tesla.jpg

The above tweet by Musk is not a good sign because it means he is closely tracking the share prices and reading up on what speculators are doing. Betting on such an entrepreneur is considered risky because it means he could go to any extent to keep the share prices high.

Last edited by smartcat : 4th April 2017 at 20:26.
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Old 4th April 2017, 20:52   #7
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Tesla, from pure investment/stock price perspective -

1. Stock price was approx $35 in 2012-13. Today, it is $300. Why? Wall Street is paying this huge premium mostly considering the future value of this company.

2. Huge drawback for Tesla is its ability, or rather its inability to produce as many batteries it needs to kick up production of cars. Answer - the Gigafactory! It is expected to drive down costs by upto 30% due to scale of manufacture. Ready by 2018. Once the production of batteries are up, car manufacture and deliveries at relatively lower cost will be up.

3. Tesla is not just manufacturing some fancy cars, available only for the rich. The model 3 is expected to hit where it hurts the most. $35,000 for 200 mile range. This is in Camry/Sonata/Accord/Fusion/Charger/Malibu/Impala territory - the average American preferred car. It is like India's hatchback territory. The current Tesla models (especially Model X) are fairly popular too, you see them on the roads all the time.

4. No other manufacturer has come close to making such battery cars for the mass market. (No, Prius is not a battery operated car! No the i series from BMW is not for mass market!)

5. Tesla is loading its cars with tech. Over the air updates to its software, constantly improving autonomous drive modes, etc. Again, this is for mass market too. Insurance companies are waking up already to offer discounts - for more autonomous drives in a car.

6. Responsive manufacturer - there are some reports of manufacturing issues with the car & Tesla seems to respond with lighting speed. Refreshing to see such things in auto sector.

7. Innovations - gull wing doors, 7 seats in a sedan (model X can have 2 child seats in the boot!). Bringing technology to mass market.

8. Maverick and committed founder/leader. Elon Musk has been delivering on all his projects. Pay pal to Solar City to Space X. Heck, he is making rockets come back and land on earth to be reused!

Compare this to Snapchat, the most recent tech IPO. Snapchat is a software, and does not produce any real goods. Another tech product can simply trump snapchat anytime. But, for any manufacturer to start to compete against Tesla will take some time.

I believe above reasons, and many more are reasons for this price surge.

Yes, all stocks inherently have various degrees of risk in them. Tesla is no exception. But then, at least for now it seems Tesla is doing all the right things and keeps surprising the market with its achievements.

Stock movement of Tesla over last 5 years -

Name:  Tesla.PNG
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Old 5th April 2017, 07:41   #8
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Quote:
Originally Posted by anurag.somani View Post
Even after taking the future potential of Tesla in account, the prices are in bubble territory.

Remember the Air-deccan & the Saharas of the world? India was flying, it was the future mode of travel (and still is). Finally after much cash-burns and bankruptcy, sanity returned to the industry and people were ready to pay a fair price for the ticket.
Comparing Air-deccan and Tesla is a bit silly. Air-deccan is a budget airline which was making losses on each ticket they sold even during their heydays (high growth years). On the other hand gross margin of Tesla cars is around 22% compared to 15% for Ford and 12% for GM.

Tesla's is investing more in R&D than rivals Ford and GM. In 2015, Tesla invested around 19% of their revenue in R&D while Ford invested 4.8% and GM invested 5.1% of their sales.
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Old 5th April 2017, 08:18   #9
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Tesla is now worth more than GM!

Quote:
After surpassing Ford in late March with a record market capitalization of $45.47 billion, Tesla is now reportedly worth more than auto giant General Motors, so says Wall Street. GM currently sits at $51.23 billion, while Tesla has a total valuation of $52.08 billion.
Tesla overtakes Ford in market value after stocks climb 5.8%-teslavalue.jpg

The recent stock surge for Tesla can likely be attributed to the automaker outperforming in its Q1 announcement and to the release of new news connected to the Tesla Model 3.

Link
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Old 5th April 2017, 08:35   #10
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Quote:
Originally Posted by smartcat View Post
The above tweet by Musk is not a good sign because it means he is closely tracking the share prices and reading up on what speculators are doing.
Deciphering that tweet for folks who didn't get it like me at first.

Stormy weather in Shortville,” Musk tweeted, a reference to traders who had been burned by 'shorting' Tesla – betting its results would disappoint and its shares would fall.



Tesla is off to a great start, but it is still very young and small in the automotive world. Tesla delivered just 76,230 cars last year.

The technology is stellar, engineering is good, the vision is great and they have set very hard targets for themselves. I.e. building 500,000 cars in 2018 and with the prospect of doubling that to 1 million by 2020. Those are staggering numbers when you look at where they are. So, the real challenge will be in scalability and profitable growth. Tesla cannot remain a cash burning start-up for long!

The success of the new and affordable Model 3 is going to be a make or break for them. The competition and customer support required in the mass market will be at a different level. It is easier to be a successful niche player in the automotive world selling in the premium segment. There cannot be any quality issues and Model 3 has to deliver from the word go even though it will be built to a cost, and the main stream customers will be less forgiving.

I do hope they will keep their feet on the ground and work hard and smart towards achieving this. The world needs more companies like Tesla, now more than ever before.
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Old 5th April 2017, 13:07   #11
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Tesla has a higher market cap, Ford has a higher enterprise value. To value a company, you need to take into account both its debt levels and equity.

For example, my local hardware store was not worth more than General Motors right before it declared bankruptcy. It did, however, have a higher market cap.

Yes! Tesla's enterprise value is 47.47B, Ford is more than three times larger at 150.34B.

https://ycharts.com/companies/TSLA/enterprise_value

https://ycharts.com/companies/F/enterprise_value
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Old 6th April 2017, 00:29   #12
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

The capitalisation of Tesla is on the right track as the world will shortly be turning towards electric transport. The Paris climate deal is a very clear signal as to where the world is heading. People are buying because they want to get an early piece of the pie.
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Old 10th April 2017, 22:17   #13
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Tesla now overtakes General Motors.

Tesla passes General Motors to become America’s most valuable carmaker!

Source: http://www.livemint.com/Companies/LJ...t-valuabl.html

Highlights -

"Tesla climbed as much as 3.4% in early Monday trading, boosting its market capitalization to about $51 billion. The company was valued at about $1.7 billion more than General Motors as of 9:35 am in New York."

"Tesla usurped General Motors a week after conquering Ford Motor Co. and spurring debate over the relative value of Musk’s company compared with some of the world’s top-selling automakers. General Motors expects to earn more than $9 billion this year and analysts predict Ford will generate adjusted profit of about $6.3 billion. On that basis, Tesla is expected to lose more than $950 million."

"GM - a company whose well-being was once viewed as interdependent with the nation’s."
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Old 11th April 2017, 11:32   #14
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Does it herald a major revolutionary change in the scenario. Like what happened when Digital cameras overtook film cameras in a very short span. See what happened to Kodak! In a very short time span film became history.
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Old 13th April 2017, 00:57   #15
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Default Re: Tesla overtakes Ford in market value after stocks climb 5.8%

Scathing attack on Elon Musk and Tesla, by Robert Lutz (ex-GM, BMW, Ford, Chrysler)
https://en.wikipedia.org/wiki/Bob_Lutz_(businessman)

Quote:
I think Tesla is doomed
Quote:
Elon Musk is the greatest salesman in the world. He paints this vision of an unlimited future, aided and abetted by some analysts. It's like Elon Musk has been beamed down from another planet to show us mortals how to run a company.
Watch the video on -
http://www.cnbc.com/2017/04/12/tesla...rman-lutz.html

However, I'm not quite sure if this guy makes sense. He is stressing on the fact that Tesla loses money on every car that is sold. But size and scale reduces costs and increases profitability right?
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