If you’re looking for a ride, you’ll do no better than Tesla. Its stock price, that is. Last week, the company announced buoyant quarterly results: a record number of vehicle deliveries, $105 million in net income, and $7.4 billion in quarterly revenue, up 17 percent from the previous one. In the next four trading days, through Tuesday, Tesla’s stock price skyrocketed 52 percent. On Monday alone, shares rose almost 20 percent. Then came Wednesday, and news that coronavirus would delay the carmaker’s delivery of the Model 3. Shares fell by 17 percent. It wasn’t Tesla’s worst day ever, but it was its second worst.
Tesla has had a rocky decade on the public market. CEO Elon Musk has been praised, vilified, and penalized by the SEC for his irreverent and seemingly off-the-cuff approach to running an automaker, epitomized by his tweets that have moved markets. This past week, though, it’s not Musk moving the market, but Tesla itself.
Tesla has always seemed to think of itself as a tech startup. It is based in Silicon Valley, not Detroit, and Musk and Co. have created much hay about the company’s now-3 billion miles’ worth of driving data from its assisted driving feature, Autopilot. But professional investors are more interested in production capacity, new factories, and battery tech than the company’s latest features or over-the-air updates. It’s hard to pin any sort of market move on any one data point, but Tesla appears to be riding a wave of enthusiasm for electric vehicles.
“From the perspective of the outside world, Tesla has for sure been considered more like a tech company than an auto company over time,” says Michael Ramsey, a senior automotive analyst at Gartner. “The reality is, the bigger they become and the more factories they build, the closer they are to Volkswagen than Amazon and Facebook.”
By Volkswagen metrics, Wall Street approves. In fact, the electric carmaker’s market capitalization is now $132 billion last week, vaulting past the 83-year-old German giant’s, at around $85 billion. (For comparison: VW churned out 11 million vehicles last year and Tesla plans to produce 500,000 in 2020.) The market is valuing Tesla roughly equal to IBM or Costco (which today pull in three and six times the automakers’ revenue, respectively), and more than BP.