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Tesla's Market Cap Surpasses Combined Value Of GM And Ford

Tesla's Market Cap Surpasses Combined Value Of GM And Ford
The stock market value of the United States based electric car maker has surpassed the combined stock values of General Motors Co and Ford Motor Co for the first time in the history of the electric car maker.
The last jump in the stock price of the Silicon Valley electric-car maker was 5 per cent on Wednesday this week as it closed at a record price of $492.14 per share. This spike in value of stocks increased its market capitalization to almost $89 billion which was $2 billion more than the combined market valuation of General Motors and Ford – which have a market capitalization of $50 billion and $37 billion respectively.
Over the past three months, the stock price of Tesla has increased by more than double its previous value driven by an unexpected profit announced by the company in the third quarter, good progress of production of cars being made at its new Giga factory in Shanghai in China and the very encouraging and better than expected deliveries of cars by the company made during the fourth quarter.
“It’s clear that Tesla is back to being a story stock and there’s a lot of good news out there,” said David Kudla, chief investment strategist at MainStay Capital Management. “But there are still some problematic issues out there, chief among them is what will its sustained profitability look like, and when will it start to be valued like a car company and not a tech company.”
Short-sellers and other traders of the company’s stocks had been expecting that Tesla would be overtaken by long established car companies, including GM and Ford, but their anticipation has been proved wrong by the progress made by Tesla Chief Executive Elon Musk.
The market capitalization of the rivals of company has been outpaced by Tesla which underscores the confidence that investors have in the capabilities of Musk and the prospect of future growth of the company. This despite the business in terms of volumes of the established car makers are much more than the business volume of Tesla. Last year, more than 2 million vehicles were delivered in the United States by GM and Ford each. In comparison, Tesla only managed to deliver 367,500 vehicles globally.
Despite the recent success in business and at the stock market, there is still skepticism about the company with many analysts and investors as they question the capacity of the company to deliver profits and positive cash flow on a consistent basis.
In recent years, the company has missed production, delivery and sale targets that it had set for itself. Additionally, financial regulators and shareholders of Tesla have also criticized and scrutinized the mercurial behaviour of Musk.
Despite this, the combination of style, technology and performance of the electric cars of Tesla is still being attempted to be replicated by most mainstream automakers as they develop new generations of electric vehicles capable of completing with those from Tesla.

Christopher J. Mitchell

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