Tesla’s market capitalization is now bigger than General Motors’, making it the largest U.S. automaker by that metric.
Investors are clearly betting on Tesla’s future potential, and are undeterred by factors such as the $773 million Tesla lost in 2016, and the fact that the sells only a tiny fraction of the cars delivered annually by established competitors. General Motors sold about 10 million cars in 2016 compared to Tesla’s roughly 76,000.
Tesla has only had two profitable quarters in its history as a public company, while General Motors earned a profit of more than $9 billion last year.
Tesla shares were up around 3 percent and trading around $312 on Monday, after receiving the highest price forecast ever issued for the stock by an analyst at a major firm.
On Monday, Piper Jaffray analyst Alexander Potter published a note upgrading his rating on the stock from “neutral” to “overweight” and raising his price target from $223 to $368.
In his note, Potter said Tesla has a “captivating impact on consumers and shareholders alike” that will be difficult for competitors to replicate, and that although bears may have rational arguments against the stock, those “probably won’t matter.”
“In many ways, TSLA seems to play by its own rules,” Potter wrote. For instance, the company burns through cash at a rate “better-established companies would likely be crucified for,” devises “unreasonably fast” production timelines, and “spurns industry norms,” by doing things such as choosing to sell directly to customers, rather than through dealers.
Even before Monday’s surge, when Tesla overtook Ford in market cap on April 3, some were saying Tesla was overvalued.
Responding to the criticism at that time, Tesla CEO Elon Musk wrote on Twitter that while Tesla could be considered “absurdly overvalued,” based on past performance, the company’s share price reflects what Tesla could achieve in the future.
Barclays analyst Brian Johnson said in a note on Thursday that while he does not see any reason Tesla shares should lose value in the short term, he does not think the company will necessarily emerge as the kind of industry leader some investors expect it to become.
But Tesla’s current technology and businesses may leave it well-positioned to enter other markets that could further boost its value.
Morgan Stanley analyst Adam Jonas said in a note published last Wednesday that the company could potentially enter markets collectively worth trillions of dollars. These include a car-sharing business with a value Jonas estimates at around $10 trillion, a $1 trillion logistics market, and a $2-3 trillion energy storage market.
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