Though I am not an expert on stock prices, least of all on the price of Tesla stock, I am going to make a prediction. And with the passage of time, I’ll either pull out this Thought Tool and wave it proudly to remind you of what I wrote, or else I’ll eventually bury it and hope nobody remembers it. Meanwhile, I’ll provide some information so you can make up your own mind.
What makes me write about Tesla stock is not only that at the start of 2017 it was about $200 a share and by mid-year it was nearly $400 (though it has now sunk back to about $300). I am interested in it for a more fundamental reason. You see, even at $200 it made no sense to me. Tesla’s market capitalization, the value the market places upon the company, $60 billion, is now about the same as General Motors or even a bit more. However, last year Tesla sold about 75,000 cars while General Motors sold about ten million! Although Tesla took in about $7 billion in sales revenue, overall it lost over $600 million. Meanwhile, good old GM took in over $150 billion in sales on which it made a profit of nearly $10 billion. Yet, the price of General Motors stock has fluctuated between $35 and $45 this year. Doesn’t something seem off?