It’s sobering to compare Tesla’s gigantic market cap and slender earnings to the “all other” category of manufacturers that bend metal into hoods, frames and chassis.
The stock that The Big Short investor Michael Burry––among other prominent skeptics––is betting against as wildly overvalued is bubbling again. At 2:00 PM on September 7, Tesla defied a modest downdraft in the S&P 500 by adding 20 points or 2.7% to $754 a share, lifting its market cap to $755 billion. The EV-maker staged a powerful, $200 billion-plus resurgence from the depths of mid-May, when its valuation had dropped one-third from its January peak. Tesla’s much-better-than-expected earnings in Q2 cheered investors and inspired long-time fan Cathie Wood of Ark Invest to predict that its shares will quintuple to $3,000 by 2025. CEO Elon Musk further stoked optimism by declaring in a recent email to employees that Tesla could be selling or leasing five to ten million vehicles annually in four years, a seven to fourteen fold increase over its deliveries in the past four quarters.
It’s sobering, however, to compare Tesla’s gigantic market cap and slender earnings to the “all other” category of manufacturers that bend metal into hoods, frames and chassis. The second to seventh most valuable automakers are Toyota ($252 billion), Volkswagen ($149 billion), BYD ($112 billion), Daimler ($89 billion), Great Wall Motors ($73 billion), and General Motors ($71 billion). By the way, BYD––backed by Warren Buffett’s Berkshire Hathaway––is a major Tesla rival as China’s largest EV-producer. All told, those six carmakers feature combined valuation of $746 billion.