Tesla Motors Inc. (TSLA)’s market value exceeded $20 billion in intraday trading on investor optimism that Elon Musk can keep widening the appeal of electric-powered cars as the company’s sales increase.
The stock climbed 1.5 percent to close at a record $164.22 in New York, after climbing as much as 6.9 percent to an intraday high of $173. The shares trimmed their gains after Secretary of State John Kerry said the U.S. will hold Syria’s government accountable for using chemical weapons. Tesla’s market value was $19.9 billion at the close.
Shares of the Palo Alto, California-based company, which had its initial public offering in 2010, have surged almost fivefold this year. The 10-year-old carmaker named for inventor Nikola Tesla intends to deliver 21,000 of its flagship Model S electric sedans this year and double that in 2014. Chief Executive Officer Musk, 42, has said demand for the car, priced from about $70,000, outstrips Tesla’s ability to make it.
“Tesla’s the Apple of automotive -- it’s managed to cross the automotive and technology fields to become this hot commodity,” said Alan Baum, an independent auto analyst at Baum & Associates in West Bloomfield, Michigan. “Justified or not, the expectations for this company are now very high.”
Today’s rise may have been aided by Tesla’s sales performance in California, where the Model S ranks as the third-best-selling luxury sedan in the biggest U.S. market, and anticipation of overseas demand, said Ben Kallo, a San Francisco-based analyst with Robert W. Baird & Co. who rates Tesla shares outperform.
“Deliveries in Europe and taking reservations in China are all helping with strength,” Kallo said today.
In the year’s first half, Model S trailed only Daimler AG (DAI)’s Mercedes-Benz E-Class and Bayerische Motoren Werke AG (BMW)’s BMW 5 Series models in the luxury and sport category in a report this month from the California New Car Dealers Association. Daimler is a Tesla investor, with a 4 percent stake.
By sales and production volume, Tesla ranks among the smallest of international automakers. By market value, it ranks as high as 13th globally, behind Kia Motors Corp. (000270) and ahead of Suzuki Motor Corp. (7269), Mazda Motor Corp. (7261) and Fiat SpA (F), the majority owner of Chrysler Group LLC, according to data compiled by Bloomberg.
General Motors Co. (GM), the biggest U.S. automaker by sales, has a $48.3 billion market capitalization. Ford Motor Co. (F)’s market value of $64.6 billion is the largest among U.S.-based carmakers. Tesla shares trade at about 260 times estimated 2013 earnings, compared with 10 times for GM and 11 times for Ford, according to data compiled by Bloomberg.
Model S Highlights
Tesla’s Model S was named 2013 Car of the Year by Motor Trend magazine; Consumer Reports in a May review rated it among the best it’s ever tested; and this month the company said the model received top crash and safety ratings in tests by the U.S. National Highway Traffic Safety Administration.
The company made a secondary public share sale in May, after posting its first quarterly profit, excluding some items. That helped Tesla raise more than $1 billion to fund product development and pay off a U.S. Energy Department loan nine years early.
Musk’s net worth has more than tripled this year to $8 billion, according to the Bloomberg Billionaires Index.
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