Tesla Now Worth More Than Ford

8 months ago by Eric Loveday 36

Tesla Emblem On Model S

It doesn’t mean much, but Tesla has bragging rights over Ford for now.

The gap has been closing for quite some time now and even recently we reported that Tesla’s market cap was within spitting distance of Ford’s.

Well, as of close last evening, the inevitable happened with Tesla surpassing Ford in market capitalization.

Tesla (TSLA) closed out yesterday with a market cap of $45.47 billion (see below):

Tesla Market Cap At $45.47 Billion

Meanwhile, Ford had fallen to $45.35 billion (see below):

Ford Market Cap At $45.35 Billion

The numbers don’t matter all that much though. What’s of utmost importance for Tesla is making good on all of its Model 3 promises. If Tesla can pull off the 3, both the market cap and stock value will surely shoot upwards, leaving Ford far behind.

Oh…if you’re wondering why Tesla’s stock price shot up in recent days, well that Elon Musk Tweetstorm on the Model 3 is the most likely cause. That video put out by Musk probably helped a bit too.

via Electrek

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36 responses to "Tesla Now Worth More Than Ford"

  1. realistic says:

    Should be sufficient to silence the foil-hatted chorus of “Wall Street hates Tesla” conspiracists.

    1. John says:

      Nope. They’ll just create another conspiracy to explain this “un-explainable” event.

      1. ffbj says:

        Yes, that is the particular methodology the use.

      2. Independent Observer says:

        China purchasing 5% of Tesla drove up the price. No secrets or conspiracy.

    2. Chris O says:

      Wallstreet isn’t about love and hate, just about greed. The shorters will spin everything as Tesla’s impending doom, the investors will spin things the other way around…

      1. realistic says:

        And you should love the avaricious nature of Wall Street’s animal spirits because it creates the vibrant risk-taking and funding environment that makes ventures like Tesla possible. (Yes, like you, I don’t much like being around these folks.)

        1. Pushmi-Pullyu says:

          I’d love the stock market a lot more if it wasn’t yet another case of how the super-rich have rigged the financial system to take wealth from the little guy, the small investor, and give that wealth to the big, super-rich investor and the very large investment firms who practice high-frequency trading. In some of the more extreme cases of high-frequency trading, the firms speed their trades by microseconds by gaining physical advantages such as moving their computer servers to buildings closer to the stock exchanges’ own servers, making it physically impossible for the small investor to compete.

          Quoting from “High-frequency trading: when milliseconds mean millions”:

          The US stock market was [and is] now a class system, rooted in speed, of haves and have-nots. The haves paid for nanoseconds; the have-nots had no idea a nanosecond had value.

          The have enjoyed a perfect view of the market; the have-nots never saw the market at all.

          What had once been the world’s most public, most democratic, financial market had become, in spirit, something like a private viewing of a stolen work of art.

          http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10736960/High-frequency-trading-when-milliseconds-mean-millions.html

          1. realist says:

            Can’t disagree with your view of HFT. The idea that it’s “needed for liquidity” is nonsense. IMO it contributes to the step-change rate of volatility (although technicians argue it also helps to dampen it — I don’t see how).

            Mostly I hate how the HFT advantage allows these guys to skim that exta penny or two here and there on EVERY SINGLE TRADE I make. The income to these guys simply because they can locate an appliance a few miles closer and have switching speeds a bit faster is really not defendable.

            I abhor asinine taxation or legal throttling of income opportunity by regulatory neddies who are too dumb to understand or too jealous. But whatever the benefits that exist as a result of HFT, IMO the ill effects outweigh them. Thus it pains me to say it but some kind of taxation based on pace of buy/sell — like any trade in which the share is held for less than x minutes incurs a flat $y fee per trade, with all the taxes collected going to securities investigation and enforcement — would be a start to rein in some of the irrationality.

  2. DTM says:

    Thanks to Tencent

    1. ffbj says:

      Yeah. Also making shorting more expensive. Taking 5% of the shares off the market, potentially.
      This buy raises more cash than the recent stock offering.
      About the worst possible news that Bermudas’s could imagine.

      1. realistic says:

        ff, if Tencent is buying outstanding shares (which I’m pretty sure they are), then it really doesn’t raise any cash for Tesla. Tesla has to issue more shares to bring the cash into the company as a financing event. They already issued the most recent million+ shares and collected the $250-ish each for them. Tencent bought 8M+ shares from the market.

        Now, I’ll be very quick to say that Tesla’s ability to make their next raise (later this year, probably) is made MUCH more attractive by Tencent’s purchase and in turn can make money cheaper for Tesla to borrow. This is, in its own way, an indirect injection. But Tencent’s purchase did not directly raise cash for Tesla.

        1. ffbj says:

          Yeah. I should have been more careful, as in it doesn’t directly raise cash.
          Good catch.

      2. realistic says:

        Reading the 13G here:

        https://www.sec.gov/Archives/edgar/data/1293451/000095010317002811/dp74362_sc13g.htm

        Page 5 item 4 Ownership – As I noted in another post here the exact language is: “The 8,167,544 shares of Issuer common stock were acquired by the reporting persons in a registered offering of common stock by the Issuer on March 17, 2017 and through open market purchases, for an aggregate purchase price of $1,777,842,836 (including commission).”

        Translation: some shares were bought before the March 17 offering and some came from the March 17 offering. There is no ADDITIONAL cash to Tesla generated by this purchase beyond what was already announced after the offering.

  3. ijonjack says:

    Tesla is a Quality Stock with Massive future Potential with Charging stations in Place & growing .. ..Ford is Dead in the water with no future plans ,More like Junk Bonds Rated Even if DUCKY signs all these orders to help Ford Dirty Up The Air again Some more….Whoa ..

    1. Mister G says:

      Ford is the adult American that shunned an education after high school and preferred to stay on the couch watching TV and working minimum wage jobs lol

  4. ffbj says:

    I think the the oft vaunted, and talked about sea change in the auto industry is now occurring. Before the scale of it was masked as people continued to purchase the legacy ice vehicles as the economy improved, but as things are still improving sales of cars are falling.
    Inventories are languishing on dealer lots at record numbers, and I believe the culprit in the mystery of what happened to car sales is evident.

    Part of it of course is just exhaustion, but the other is that compelling evs are now becoming available. While many people will still not buy them they are adopting a wait and see attitude. Delaying purchasing a new vehicle.

  5. Chris O says:

    If we accept that the car industry will change more in the next 10 years than it did in the last century moving from internal combustion self drivers to plug-in autonomous vehicles it makes sense to value companies that are leading that change more than companies who are just hanging in there, slowing things down where they can.

  6. William says:

    Ford needs to do Something! Try to come with a 200mi. Chevy Bolt competitor at least, for starters. Or, How about an F-150 PHEV Truck with Chevy Volt (2nd gen. 2017 equivalent 50 mile range)? Ford, this is your Teslatosterone wake up call!

  7. RussB says:

    Enterprise Values:

    Tesla: 48.62B USD
    Ford Motor Company: 149.71B USD

    1. Roy_H says:

      I know that Tesla stock is overvalued, but I thought the difference in hard assets would be a lot more than 3x. Tesla is expanding fast with added value of more superchargers, stores and factories. I can see in a few years that it won’t be just stock that is worth more.

      1. realistic says:

        “… I thought the difference in hard assets would be a lot more than 3x. Tesla is expanding fast with added value of more superchargers, stores and factories. I can see in a few years that it won’t be just stock that is worth more.”

        Hang on a second, Roy. The numbers that Russ put up are Enterprise Value, and while that SOUNDS like it implies someting about assets, it doesn’t.

        EV is another way to look at a theoretical net takeover cost. If you bought a company and wated to make it 100% yours (RoyH Cars LLC), you’d have to pay the value of the shares, pay off all the people holding preferred shares and the minority interests and make good on the debt. Of course all the cash and investments would go in your pocket.

        SO…

        Enterprise value EQUALS
        market value of common AND preferred stock/equity that you must buy
        PLUS market value of debt that you now have to pay
        PLUS minority interest that you remunerate
        MINUS cash and investments.

        That’s why the numbers look the way they do.

        Ford has a lot of debt (although the majority of that is consumer debt — car loans — which produces a lot of cash) and a lot of cash that gets SUBTRACTED from EV.

        Tesla’s number is comprised mostly of market cap and very little cash is SUBTRACTED because they don’t have much.

        Enterprise Value is an interesting number but mostly as a POV of cost to acquire said enterprise. Asssts are not factored in EV.

        A better view of “assets” as valued by standard accounting practice would be book value.

        These values are +/- 10-15%
        F book value ~ $28B (trades at around 1.5x book)
        TSLA book value ~ $5B (trades at around 8x book)

  8. EVA-01 says:

    There’s nothing brag worthy about giving up equity in your company for money.

    1. realistic says:

      I don’t understand. Tencent didn’t “take equity” from Tesla. They bought shares on the open market and from Tesla’s share issuance.

      Apparently they’ve been buying for a long time. The 13G filed by Tencent Holdings says they have purchased 8,167,544 shares. Some were bought on the open market and some were purchsed in the March 17th common stock offerring. these purchases are NOT new money to Tesla ourtside of what you already know was generated from the March 17th share issue.

      The aggregate purchase price for the shares including commission amounted to $1,777M, which says the average share price was about $217 each. That means Tencent has been buying for a long time and had to file because they hit the 5% threshhold.

      Public companies sell their shares to “the public”. The generate cash by telling people that owning the shares is beneficial in some way: future value goes up or dividends will be paid. That’s it. Tencent holdings just looks like Baillie Gifford or the Baron funds or Fidelity or even you (with 8M shares).

      1. EVA-01 says:

        I may need further clarification on this.

        Am I wrong to believe that selling “shares” of my company is nothing more than a swap of ownership in my company for cash? I don’t believe I’m wrong.

        1. realistic says:

          If the company issues new shares, the company gets cash in exchange for the purchase of a percentage. If the buyer purchases shares on the open market, the company gets nothing. The shares were already owned by somebody else who decided to sell them.

          On March 17 Tesla issued about 1.5M shares, which increased the number of shares by a little less than 1% to around 163M shares, and in the process raised about $400M (less fees).

          Now, nobody criticizes Tesla more than I do about their never-ending equity sales as the primary way to raise cash: I’m with you. But in terms of dilution it wasn’t meaningful, and the value of outstanding shares went up anyway, so shareholders don’t care.

          Tencent bought 8 Million-odd shares. Some of those shares were bought when Tesla issued about 1.5 Million shares on March 17th. Mostly Tencent just bought shares on the open market, and apparently they’ve been doing so for quite some time. When they hit 5% ownership, Tesla has to tell the markets, so they filed a 13G.

          My point is that Tesla didn’t meaningfully “sell off their equity” to Tencent. Mostly Tencent bought from other shareholders. The good news for Tesla here (and this is coming from somebnody who finds Tesla’s business model to be questionable, so I’m no advocate) is that there is a successful institutional investor (perhaps I should say “another”) who wants to own a significant piece of the company.

          Therefore, it is “brag worthy”, really, and since Tesla has to respond to ANY shareholder with a lot of voting shares, having another one is really not a sell-out.

          1. ¯\_(ツ)_/¯ sven says:

            realisitic said:
            “Now, nobody criticizes Tesla more than I do . . .”

            I humbly disagree.

            😉

            1. ffbj says:

              Yeah. I can vouch for that.

  9. Mister G says:

    GO TESLA GO…in a few years Ford will be borrowing money from US TREASURY to stay in business and will blame Tesla business plan and whine about how unfair advantages Tesla has in their business plan lol

  10. speculawyer says:

    That is pretty crazy. Does it make sense? It certainly might. It is a huge bet on battery prices coming down and/or oil prices going up.

    The latter is not likely to happen any time soon.

    1. Roy_H says:

      Ten years ago it looked like oil was headed for over $150/barrel and we would never see less than $100 again. I credit Tesla and Nissan for applying pressure on oil companies to be competitive. Higher gas prices would have accelerated the switch to electric, but even low prices won’t stop it.

      1. Taser54 says:

        I don’t see support for that. The recent increase in US Oil production (fracking)has little to do with EVs.

        1. speculawyer says:

          Recent increase? Oil has largely flatlined. It dropped after oil prices went down in the $20s. Slight uptick lately since it was above the $50s but we are now down below $50 again. Price/production likely flat for time being unless some big news thing.

          (But decreased production not due to EVs, due to low oil prices.)

      2. speculawyer says:

        Low oil prices will not stop EVs…but they will prevent them from growing rapidly (unless there is a big battery price drop).

        And the real tricky thing is feedback loops. If battery prices hit $100/KWH and people started buying EVs like crazy then oil prices might drop back down $20s thus making ICE look good again.

        It is all so complex that everyone is just guessing. Me included. But it is an educated guess.

  11. DL says:

    Hmm, market cap is a great way to ….. …. …. around, but:

    Annual Revenue 2016:
    Ford, $147B
    Tesla, $7B

    Net Income 2016:
    Ford, $4.6B
    Tesla, oops…lost $675M

    Let’s keep things in perspective.

  12. Danny Rasmussen says:

    Soon big oil will be skwerming so much that the lobbyists will give up