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Tesla had an excellent year. The price of its share increased by 466% in 2020 and thanks to this growth Elon Musk is now the third richest man in the world.
Tesla Motors was founded in 2003 by engineers Martin Eberhard and Marc Tarpenning and is named after inventor Nikola Tesla.
His goal was to show that people didn’t need to compromise when buying an electric car and that they can be better, faster, and more fun to drive than gasoline cars.
Musk, who has been the face of Tesla for more than a decade, joined the company in 2004 as president after investing $ 6.3 million in Tesla stock during a Series A investment round.
He has served as CEO of Tesla since 2008 and has been the driving force behind the company’s success.
A prototype of Tesla’s first car, the Roadster, was first revealed in 2006 and officially launched in 2008.
The Tesla Roadster unveiled the automaker’s cutting-edge battery technology and electric powertrain.
The Roadster was followed by the all-electric Model S sedan, the Model X sport utility vehicle and the more affordable Model 3.
It expanded beyond an automaker through its unique set of power solutions, including Powerwall, Powerpack, and Solar Roof.
Gigafactory 1 stands behind Tesla’s automotive and energy products, a facility designed to significantly lower battery cell costs.
Tesla’s staggering stock price growth
Tesla had a difficult past. Musk recently said they were about a month away from bankruptcy during the run-up to Model 3 production between 2017 and 2019.
This wasn’t the first time Tesla had been on the ropes: it was heading for bankruptcy with just two weeks of cash in the bank in 2013.
Musk made a deal with former Google CEO Larry Page the search giant bought Tesla for $ 6 billion, but this deal never went through.
This is because Musk “required all staff, regardless of their job title, to get on the phone and sell cars to curious customers who have made refundable deposits.”
These financial woes are now a distant memory, as Tesla is hitting regular highs in the stock price as many investors remain optimistic about the future of the company.
The company began trading on the Nasdaq in June 2010 at $ 17 a share, which raised $ 226 million.
The stock price doubled in the next three years and continued to make steady gains after a big jump in 2013.
Tesla already had ten bags in 2019, but it was during the last twelve months that the company showed its highest growth in share price.
Over the past year, Tesla’s stock price has risen by more than 600%, making it one of the best-performing stocks in 2020.
This share price growth brought Tesla’s market capitalization to more than $ 400 billion and the S&P 500 Index Committee subsequently announced It will join the S&P 500 on December 21.
This was welcomed by investors and Tesla’s stock price soared more than 13% on the news.
The World’s Most Valuable Car Maker
Tesla’s staggering share price rise in 2020 means it’s now the world’s most valuable automaker.
It officially surpassed Toyota five months ago, and Tesla’s market capitalization is now more than double that of its closest rival.
Many people have questioned Tesla’s valuation, as it produces far fewer vehicles and generates only a fraction of the revenue of many of the major automakers.
Last year, for example, Toyota sold nearly 11 million vehicles, while Tesla sold fewer than 300,000 cars.
Toyota’s 2019 revenue also exceeded Tesla’s: $ 253 billion for Toyota versus $ 21 billion for Tesla.
It’s easy to understand why AutoNation CEO Mike Jackson called Tesla’s valuation “insane” and why many investors are shorting the stock.
However, short sellers have lost a lot of money and Musk has even mocked them by starting to sell shorts with the company logo.
The company’s fundamentals and future growth prospects clearly do not warrant its assessment, raising the question of what is driving the share price growth.
Byron Lotter, Vestact portfolio manager, explained In the long term, Tesla has the potential to be the next Apple.
“I think they are going to corner the EV market in the next decade, like Apple did with smartphones because of their first-mover advantage and brand quality,” he said.
He added that Tesla’s power utility business is also underrated.
“Maybe on a fundamental basis valuation doesn’t make sense, but that can be said for many other companies like Amazon in the 2000s,” he said.
Lotter said it is very possible that Tesla will one day become a $ 1 trillion business.
Tesla’s staggering valuation
At $ 461 billion, Tesla is not only the most valuable automaker in the world, it is also more valuable than many of the world’s top automakers combined.
The image below shows how valuable Tesla is compared to the combined value of major automakers like BMW, Mercedes Benz, Porsche, Ford, General Motors, Honda, and Hyundai.
Now Read: Tech Bullish: Behind Tesla’s Shocking Stock Price
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