DJ Tesla Is Now the Second-Most-Valuable Car Maker in the World. Look Out Toyota. -- Barrons.com
By Al Root
Electric-vehicle pioneer Tesla is now the second-most-valuable car manufacturer on the planet -- Toyota Motor being the only auto maker that Elon Musk's company has to eclipse to claim the crown.
Tesla (ticker: TSLA) hit another record in Wednesday-afternoon trading. Shares jumped more than $39 a share, or 7.2%, to $586.35. The surge gives Tesla a market value of about $106 billion, leaving previous No. 2 Volkswagen (VOW. Germany) in the dust. The German manufacturer's market capitalization is about $99 billion.
Earlier this month, Tesla passed Ford's (F) peak market value of about $81 billion to claim the title of most valuable car company in America ever. The values, though, aren't adjusted for inflation.
Tesla shares were about $470 at the time and the stock rally didn't stop there. Shares are up an incredible 128% over the past three months, crushing comparable gains of the S&P 500 and Dow Jones Industrial Average over the same span.
Now that Volkswagen is also in the rear view mirror, only Toyota (TM) is larger by market capitalization. It might stay that way for now. With Toyota valued at more than $230 billion, Tesla shares would have to reach about $1,250 to surpass it, assuming Toyota stock didn't move too.
It is worth noting that Toyota and Volkswagen, on a combined basis, sell more than 50 times the number of vehicles that Tesla does. But Tesla is growing faster and is the world's leading producer of electric cars.
Better-than-expected third-quarter earnings catalyzed the recent rally. Now Wall Street analysts are adjusting price targets. That seems to be adding fuel to the Tesla stock fire.
New Street Research analyst Pierre Ferragu, for instance, increased his price target from $530 to $800 a share on Tuesday. Wedbush analyst Dan Ives increased his price target from $370 to $500 a share on Wednesday. Ferragu rates shares the equivalent of Buy. Ives rates the stock the equivalent of Hold.
Overall, analysts have increased their target prices from $285 to $385 a share since third-quarter numbers were reported in October. Analysts, based on that metric, are still chasing the rally. In fact, only three target prices are higher than today's stock price, according to FactSet.
The gap between analysts and the market doesn't have to be predictive. Instead, it is a sign that everyone has been caught off guard by the rally.
Write to Al Root at allen.root@dowjones.com
(END) Dow Jones Newswires
January 22, 2020 15:11 ET (20:11 GMT)
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