It’s been a long time since shares of Tesla Motors Inc (NASDAQ:TSLA) have been even remotely connected to the company’s fundamentals. Wall Street is certainly infatuated with Tesla, and it’s easy to see why. However, investors have eyes for just one U.S. automaker.
Writing on Quartz, John McDuling has put together some great charts illustrating Wall Street’s obsession with Tesla.
At this year's Sohn Investment Conference, Dan Sundheim, the founder and CIO of D1 Capital Partners, spoke with John Collison, the co-founder of Stripe. Q1 2021 hedge fund letters, conferences and more D1 manages $20 billion. Of this, $10 billion is invested in fast-growing private businesses such as Stripe. Stripe is currently valued at around Read More
Tesla soars, while others trade relatively flat
He starts by looking at Tesla Motors Inc (NASDAQ:TSLA)’s stock chart dating back to 2010 when General Motors Company (NYSE:GM) had its initial public offering following its bankruptcy. He included Ford Motor Company (NYSE:F) on the chart as well, and Tesla is the clear outlier. While the other two U.S. automaker’s stocks hovered moved slightly below the 0% mark, Tesla remained above them even though it too was right around the 0% mark.
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Then in late 2012, we started to see Tesla Motors Inc (NASDAQ:TSLA) take off. In 2013, shares soared for most of the year before dipping in the wake of the three Model S fires. It didn’t take long for them to turn back around though.
Looking at Tesla’s sales
He also looked at how Tesla Motors Inc (NASDAQ:TSLA) stacks up in terms of sales. Everyone pretty much knows that the company’s share of the market is small compared to behemoths like General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F). As McDuling points out, Tesla’s “towing valuation” became “completely out of whack” with the valuation of all other automakers in the world. He used data from Deutsche Bank for his chart.
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As you can see, Tesla Motors Inc (NASDAQ:TSLA)’s market capitalization per vehicle sold is astronomical compared to that of other major automakers. And then there’s the topic of future sales. Ultra-bills are gazing far into the future, but even in the best-case scenario according to Goldman Sachs, Tesla is projected to become the eighth biggest automaker in the world by 2025.
Why Tesla is unsettling Wall Street
So why have investors become so infatuated with Tesla Motors Inc (NASDAQ:TSLA)? Clearly it is because they have bigger and better things in mind. Ultra-bulls expect the gigafactory to enable the company to disrupt other industries, but even before the announcement about that facility, shares were soaring. Unfortunately the big problem right now is that we just don’t know how far Tesla will be able to go in adjacent markets thanks to its gigafactory. Investors are betting on a whole lot of disruption, but then again, if the company really is the auto industry’s Apple Inc. (NASDAQ:AAPL), the payoff will be big. But of course with a big payoff comes loads of risks in the meantime.