If it seems like last week when Tesla (TSLA) toppled Ford (F) in market capitalization, that’s because it was! Now, the all-electric-car company hit a market value of $50.84 billion on Monday, passing General Motors (GM) at $50.79 billion.
Tesla’s slow but steady rise is creating conflicting opinions. While investors and potential consumers are optimistic about Tesla’s Model 3 car which will be released this year at $35,000 marking Tesla’s cheapest car yet, some don’t share the same enthusiasm.
Analysts are confused whether market value numbers mean anything for the electric-car makers. According to the Verge, ”Tesla, unlike GM and Ford, is still losing money. It’s expected to report a loss for the next few quarters and all of 2017.”
Renowned journalist and principal technology columnist, Walt Mossberg, tweeted about Tesla’s rising value: ”I admire Tesla and Elon Musk but this is the billionth example of why stock market valuations don’t reflect reality.” Musk then took the liberty to reply humorously saying ”et tu, Walt?” A third person then replied ”the stock price is the reflection of the potential future of a company, not the present.” Something Musk completely agreed to, tweeting: ”Exactly. Tesla is absurdly overvalued if based on the past, but that’s irrelevant. A stock price represents risk-adjusted future cash flows.”
But Tesla and its investors see immense potential, just last year when the company announced its Model 3, more than 373,000 people pre-ordered. The company aims to increase production from around 76,000 cars in 2016 to 500,000 cars in 2018. This amazing rise in production is achievable considering that Tesla’s increasing value will eventually translate into profit. Unlike GM and F’s revenues that have remained flat over the past couple of years.
Speaking of the past, Tesla has been positioning itself not just as a carmaker, but as a technology and design company for four years now. It’s the parent company for Solar City, a company that’s currently working on designing practical and affordable solar panels and solar roof tiles. Tesla is also working on Gigafactory: a lithium-ion battery factory under construction that is projected to change the battery industry as we know it.