Soaring stock sends Tesla market value past Ford, GM, making it the most valuable American automaker (on paper)
REPORT: EV MAKER NOW WORTH $53 BILLION THANKS TO BIG LEAP IN STOCK VALUE
Tesla received some good news this week: Its market value of $53 billion now exceeds that of Ford and GM, Bloomberg reports. The nation's smallest automaker arrived at this enviable position via a 7 percent spike in share value earlier in the week, which took it past the vastly larger Ford Motor Co. and General Motors.
Overall, Tesla stock rose 38 percent in 2017.
Tesla's new market capitalization reality is slightly difficult to process: Ford's net income during the last five years amounted to $26 billion, while Tesla lost $2.3 billion during the same period. As Bloomberg notes, Tesla's sales of 40,697 vehicles in 2016 represent three weeks of sales of the Ford F-Series trucks, with Tesla coming in 30th in terms of sales in 2016.
What prompted the stock rally was Tesla's better than expected quarterly vehicle deliveries, with the electric automaker delivering 25,418 vehicles during the first three months of 2017. That's an increase of 69 percent over the same period in 2016, with Tesla crediting long-awaited gains in production capacity to the strong results.
Tesla CEO Elon Musk went on Twitter to taunt short sellers of Tesla stock, who have attempted to make money by betting against Tesla given its long march to something approaching profitability (as well as expectations that it's about to be decisively surpassed in electric vehicle sales by a major American or European automaker).
Still, market analysts expressed some significant reservations about Tesla's short-term prospects in its transition from a boutique maker of high-priced EVs to a more conventional midsize automaker. It will need to increase its store and service center reach while fending off competitors' models arriving before the end of the decade -- some with longer range and pricing comparable to the Model 3.
A big challenge for Tesla is still ahead in 2017 as the Palo Alto-based automaker gets ready to begin production of the Model 3 sedan, its first volume-aimed EV. Earlier in 2017, Tesla raised $1.2 billion through the sale of convertible notes and stock in an effort to shore up its cash reserves ahead of the start of production, expected to begin this summer.
After that latest round of fundraising, in which Musk himself spent $25 million on 95,420 shares of stock, the company indicated that it won't need more cash this year to get the Model 3 rolling out of the factory.
Production of the 215-mile-range Model 3 is expected to reach 5,000 units per week by the end of the year, reaching the 10,000 unit per week mark in 2018. Seen as Tesla's most important model to date, the Model 3 already has customer reservations totaling 373,000, a number that surprised Tesla itself when it began taking deposits for the compact sedan last year.
Original article: http://autoweek.com/article/car-news/teslas-market-capitalization-shoots-past-ford?utm_source=DailyDrive20170405&utm_medium=enewsletter&utm_term=headline-center&utm_content=body&utm_campaign=awdailydrive