Tesla has a message for Ford and General Motors: Watch out. This young buck automaker has veterans running for the hills, and has overtaken GM to be the most valuable automaker in America (and almost the most valuable company in the country, to boot).
Where other automakers’ sales and shares have been tumbling, Tesla is on a rise to the top. Despite warnings by some analysts, Tesla shares are still going strong. This appears to be due to strong first-quarter sales and the fact that Chinese “financial powerhouse” Tencent Holdings bought a 5 percent stake in the company.
Shares from both Ford and GM tumbled this week on the heels of a warning that the new car market in America is headed for a slump. On the other hand, Tesla shares jumped 7 percent this week after record production and deliveries were reported for the first quarter. Where Ford’s market cap settled at $45.1 billion, Tesla’s skipped ahead to $48.2 billion, making it the second-most valuable American carmaker behind General Motors, which is worth $51.3 billion.
That being said, Tesla isn’t a perfect company. Aside from being very young, it has only generated a profit in two out of the past 13 quarters. The launches have been fraught with delays, and market cap is only one metric of a company’s worth.
And compared to global car makers, Tesla is peanuts. Toyota, which is based in Japan, is worth $177 billion. That’s Tesla’s entire market cap times three, for those who don’t want to do the math.
If you’re thinking about rushing to call your stockbroker to buy, buy, buy, wait for a second. Tesla might be experiencing a meteoric rise right now, but it has a checkered history. Just last year, Tesla’s stock hit a low of half its current value. It has experienced a constant stream of peaks and valleys ever since, meaning it’s far from a get-rich-quick buy.
We’ll just have to wait and see what happens when Tesla reports its latest earnings—those will have a big impact on the market, and given its history of only two quarters of profit, the results could be ugly. So, by all means, buy a Tesla. But you may want to give it more thoughtful consideration before you rush out to buy stock in the company.