Tesla's $173B value leaves Ford, GM eating its dust

Tesla's enterprise value just passed Ford's for the first time

Tesla is officially the king of the U.S. auto market.

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The electric-vehicle maker’s enterprise value, or market capitalization plus cash and debt, topped Ford’s on Tuesday for the first time. It surpassed General Motors’ on Jan. 31.

TickerSecurityLastChangeChange %
TSLATESLA INC.430.83-8.84-2.01%
FFORD MOTOR COMPANY7.59-0.08-1.04%
GMGENERAL MOTORS COMPANY33.35-0.10-0.30%

“Tesla shares are up again significantly this morning and passed the $900 level in a parabolic run for the Wall Street history books,” wrote Dan Ives, a New York-based managing director at the investment bank Wedbush Securities, in a note sent to clients on Tuesday.

Tesla’s enterprise value zoomed to $173.7 billion on Tuesday as its shares surged by more than 20 percent. The iconic American automakers Ford ($154.7 billion) and General Motors ($130.8 billion) were left in its dust. Tesla’s market cap, which doesn't include debt and cash, hit $168.9 billion on Tuesday; it became bigger than Ford and GM’s combined on Jan. 9.

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The one key metric where Tesla lags the traditional automakers is sales. Last year, Tesla sold 195,120 vehicles while Ford and GM sold 2.4 million and 2.87 million, respectively, according to goodcarbadcar.net.

However, New Street Research analyst Pierre Ferragu laid out a case for Tesla closing that gap in a note sent to clients on Tuesday.

He says Tesla will sell 2 million to 3 million vehicles annually by 2025, pushing shares to $1,100 to $1,700 apiece. That would give the automaker a market capitalization of $346 billion at the upper end of the forecast.

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As for the near-term, Ferragu has tempered his optimism.

“We see 2020 playing out fine, but it is largely expected, and we see some risks on the stock,” he wrote, pointing to a first-quarter gross margin miss and the launch of the Model Y crossover SUV potentially disrupting Model 3 momentum. On Tuesday, Ferragu downgraded the stock to “neutral” while holding his price target at $800.

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Tesla shares rose 86.5 percent this year through Monday while Ford and General Motors fell 3.4 percent and 7.9 percent, respectively.