Tesla may not have been around for as long as some of the country’s most iconic car manufacturers who have been a permanent fixture in the industry for decades and yet the company has claimed a symbolic victory over all of its rivals. Tesla has actually overtaken General Motors to become the most valuable car maker in the United States. This has been made possible by Tesla’s raising market cap in the stock market.
Shortly after the market opened today, Tesla’s share price bounced up giving it a total market capitalization of $51 billion. That’s $1.7 billion more than what GM is worth on the market.
This is symbolic and doesn’t mean that Tesla is actually “better” than General Motors, is making more cars than its established competitor, or is even making more money than it.
A stock’s price normally reflects the future potential of the company and given Tesla’s recent results which beat investor expectations, it shows that people who have poured money into Tesla stock are hopeful that its performance will continue to increase in the coming quarters.
It goes without saying that Tesla can just as easily lose this top spot as far as market cap is concerned if the stock price retraces a bit in the coming days, or if GM’s stock rises and pushes its market cap past $51 billion.
Market capitalization based on stock price aside, General Motors and Tesla are still poles apart. The former sold almost 690,000 cars in the previous quarter while Tesla sold only 25,000. Tesla is also known for bleeding cash and hasn’t really turned a major profit while GM is a profitable company that has survived even the worst of market conditions.
Tesla’s investors will be hoping that the Model 3 does wonders for the company’s bottom line. This $35,000 model is Tesla’s first mass-market electric car and is expected to really drive the adoption of all-electric cars among the average working class customers.
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