Tesla Market Value Rises to $20 Billion on EV Optimism

August 27, 2013 Leave a comment

Tesla Market Value Rises to $20 Billion on EV Optimism

Tesla Motors Inc. (TSLA)’s market value exceeded $20 billion on investor optimism that Elon Musk can keep widening the appeal of electric-powered cars as the company’s sales increase. The stock climbed 5.7 percent to a $171.03 at 12:02 p.m. New York time after reaching an intraday record of $172.75. Shares of the Palo Alto, California-based company, which had its initial public offering just three years ago, have surged about fivefold this year.

The 10-year-old carmaker named for inventor Nikola Tesla intends to deliver 21,000 units of its flagship Model S electric sedans this year and double that in 2014. Chief Executive Officer Musk, 42, has said demand for the car, priced from about $70,000, currently outstrips Tesla’s ability to make it.

“Tesla’s the Apple of automotive — it’s managed to cross the automotive and technology fields to become this hot commodity,” said Alan Baum, an independent auto analyst at Baum & Associates in West Bloomfield, Michigan. “Justified or not, the expectations for this company are now very high.”

Today’s rise may be fueled by Tesla’s sales performance in California, where the Model S ranks as the third-best-selling luxury sedan in the biggest U.S. market, and anticipation of overseas demand, said Ben Kallo, a San Francisco-based analyst with Robert W. Baird & Co. who rates Tesla shares outperform.

Europe, China

“Deliveries in Europe and taking reservations in China are all helping with strength,” Kallo said today.

In the year’s first half, Model S trailed only Daimler AG (DAI)’s Mercedes-Benz E-Class and Bayerische Motoren Werke AG (BMW)’s BMW 5 Series models in the Luxury and Sport category in a report this month from the California New Car Dealers Association. Daimler is a Tesla investor, with a 4 percent stake.

By sales and production volume, Tesla ranks among the smallest of international automakers. By market value, it ranks as high as 13th globally, behind Kia Motors Corp. (000270) and ahead of Suzuki Motor Corp. (7269), Mazda Motor Corp. (7261) and Fiat SpA (F), the majority owner of Chrysler Group LLC, according to data compiled by Bloomberg.

General Motors Co. (GM), the biggest U.S. automaker by sales, has a $49 billion market capitalization. Ford Motor Co. (F)’s market value of $65 billion is the largest among U.S.-based carmakers. Tesla shares trade at about 271 times estimated 2013 earnings, compared with 10 times for GM and 11 times for Ford, according to data compiled by Bloomberg.

Tesla’s Model S was named 2013 Car of the Year by Motor Trend magazine; Consumer Reports in a May review rated it among the best it’s ever tested; and this month the company said the model received top crash and safety ratings in tests by the U.S. National Highway Traffic Safety Administration.

The company made a secondary public share sale in May, after posting its first quarterly profit, excluding some items. That helped Tesla raise more than $1 billion to fund product development and pay off a U.S. Energy Department loan nine years early.

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

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Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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