Crazy Math: Tesla Now Worth More Than Fiat And Peugeot Combined

Auto industry conventional wisdom still holds that Americans aren’t embracing electric vehicles, but here’s some simple math that might cause rethinking:

As of Friday, Tesla Motors is worth more than Fiat and troubled French automaker PSA Peugeot Citroen combined.

Tesla, which sold a mere 8,931 cars in the U.S. through the first half of 2013, saw its stock hit another new high Friday of $129.90, putting its market capitalization at $15 billion. Fiat’s and PSA’s market capitalization ended the week at $7.1 billion, and $2.7 billion, respectively.

It didn’t hurt the Silicon Valley start-up that it is being added to the Nasdaq 100 index. Is this another bubble ?

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TheSteve - 7/15/2013 10:32:36 AM

+2 Boost

The stock market does not always reflect reality. Apple Computer, Inc., is a great example: Their stock shot up past $700, based on emotions, and when it took a dip, slipped below $400 is short order, again, based on emotions. Media headlines read “Can Anything Save Apple?” and “How Can Apple Get Back Its Mojo?” Meanwhile, Apple was sitting on hundreds of billions in cash, it was immensely profitable, and was selling the No. 1 most popular smart phone in North America in numbers that beat the closest competition by more than 2 to 1. So why the stock tumble? Supply chain reports from one (1) factory that iPhone manufacturing was being cut back. This was widely interpreted as world iPhone demand was waning. When the facts finally came out, the worry of declined demand was completely unfounded, and yet the stock tumbled, and investors lost their unbridled and carefree enthusiasm for the stock.

Similarly, Blackberry (formerly Research in Motion, AKA “RIM”) stock went from US$6.31 (Sept 2012) to $17.90 (in early 2013) based on the *belief* that their new operating system (BB10) and new series of phones would restore Blackberry to their former glory.

Investors *believe* Tesla has a rosy future. When quarterly reports keep painting a different picture, the stock will return to more reasonable levels.

ParadoX - 7/15/2013 6:08:15 PM

+1 Boost

The market views it as more likely to generate returns for investors than PSA and Fiat.

HughJass - 7/16/2013 4:40:18 PM

+2 Boost

Is that even after the stock tanked $18 today?

No, stockmarket only assigns perceived value based on expectations. I'd rather own IBM than Netflix yet the stockmarket says Netflix is worth 30% more on a per share basis.

Both Tesla and Netflix are bubble stocks. Netflix jumped after it made a mere $3 million on over a billion worth of revenue. A correction is in store for Tesla after 1 quarter that didn't result in a loss.