Elon Musk’s electronic car brand, Tesla, has overtaken Japanese manufacturing giant Toyota as the world’s most valuable carmaker.
Shares in Tesla have today raced past £1200/share meaning its market value of around £183bn. That is roughly £3bn more than Toyota’s current stock market value.
Shares in Tesla have surged since the start of 2020 as investors have begun to feel more confident about the future of electric vehicles. The growth is even more impressive considering that Musk more than £10bn off Tesla’s value in May after tweeting that the company’s share price was too high.
The firm has also delivered three profitable quarters in a row and despite the coronavirus outbreak, it has maintained that momentum during the first three months of 2020.
Tesla produced 82,272 vehicles in the second quarter, with 90,650 deliveries. That included Model S/X production of 6,326 with deliveries of 10,600, and Model 3/Y production of 75,946 with 80,050 deliveries.
Deliveries were well ahead of analyst expectations of a little over 70,000. Production was also ahead despite the Fremont factory being closed for a large chunk of the quarter due to coronavirus.
Tesla shares rose 9% in pre-market trading.
Nicholas Hyett, Equity Analyst at Hargreaves Lansdown
Tesla’s second quarter production may be well behind what was achieved in the first three months of the year, but given all the disruption from coronavirus that’s hardly a surprise and in the event both manufacturing and sales have come in way ahead of what analyst had expected. It’s further proof, if proof were needed, of just how impressive the Tesla machine really is.
However, for all its operational excellence we continue to struggle with Tesla’s valuation. It’s shares trade on 147 times next year’s profits, compared to the 13.7 times for rival Toyota from whom Tesla recently claimed the crown of most valuable automotive manufacture. That implies massive growth over the coming years even as traditional car manufacturers bring increasingly competitive rival models to market. The economic backdrop isn’t ideal either. An economic downturn could well be on the horizon and times of economic strain are not a good time to be selling premium sedans, as things stand even Tesla’s ‘affordable’ Model 3 will set a UK buyer back some £40,000.
Our view of Tesla remains unchanged. Terrific brand, terrific products, but terrifying price.