It’s a ridiculous comparison, but hey, the CEO walks on water.
By Wolf Richter for WOLF STREET.
Shares of Tesla [TSLA] jumped by 12.7%, to $1,024.86 on Monday, which pushed the company’s market capitalization to $1.01 trillion. This might not seem a huge amount these days, when trillions are flying by left and right, but it’s still a huge amount. Tesla now has a price-earnings ratio of 332, in an industry where PE ratios of 10 to 30 are typical in good years.
But Tesla is special, CEO Elon Musk walks on water, and nothing and no one can touch them, especially not regulators, who get routinely brushed off.
And with this market cap of $1.01 trillion, Tesla was worth as much as the next 10 most valuable global automakers combined: Toyota, BYD (China), Volkswagen (VW, Porsche, Audi, Skoda, Seat, etc.), Daimler, GM, BMW, Ford, Stellantis (includes FCA), Honda, and SAIC Motors (China):
Tesla’s share price gain on Monday puffed up its market cap by $115 billion in just one day – on news that it might sell $4.2 billion of low-margin rental cars to Hertz through 2022. Let that sink in for a moment.
That potential sale of 100,000 rental vehicles compares to 2-3 million rental vehicles that the other automakers sell to rental fleets in the US in a normal year.
That gain of $115 billion in a single day was larger than the market cap of every automaker, except the three most valuable of them: Toyota, Volkswagen, and BYD. The $115 billion single-day move added a Daimler plus Nissan plus Renault to Tesla’s market cap.
So how nuts is this?
In terms of global market share, a different picture evolves. Yes, Teslas global sales have soared over the years – from nearly nothing to very little.
So far this year, Tesla delivered 627,000 vehicles globally, of which 241,000 in Q3, a huge accomplishment, given the semiconductor shortages. For the year total, deliveries might approach 900,000 vehicles, which would be a huge push and would require a lot of walking on water. But it’s a round number, and we’ll work with it.
Total deliveries globally of light passenger vehicles by all automakers combined might come in at 75 million vehicles, which would be down substantially from 2019.
If these projections are on target – if Tesla can deliver 900,000 vehicles and all automakers globally combined can deliver 75 million vehicles – then Tesla’s global market share would surge to a record breath-taking dizzying 1.2%:
Hertz shares jumped 10% on Monday ahead of a share offering, and Tesla jumped 12.7%. But why does Tesla get into low-margin rental fleet sales if there’s strong retail demand? Read… Tesla Rental Deal is Propaganda Coup for Hertz’s “Selling Shareholders” & for Tesla. But Rental Fleets Are Low-Quality Sales Automakers Don’t Tout
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