Tesla Is Now the Most Valuable US Automaker

Investors aren't put off by lack of profits
By Rob Quinn,  Newser Staff
Posted Apr 11, 2017 2:34 AM CDT
Tesla Is Now the Most Valuable US Automaker
Tesla CEO Elon Musk listens during a meeting at Trump Tower last year.   (AP Photo/Evan Vucci, File)

Tesla sent a jolt through the auto industry Monday by becoming the most valuable American automaker, overtaking General Motors, which sold more than 100 times as many cars last year. GM also made a profit of around $9 billion in 2016, while Tesla—which has had only two profitable quarters in its history—lost $773 million last year and is on course to lose close to $1 billion this year. Tesla saw its share price hit a record high of $313 Monday after Piper Jaffray analyst Alexander Potter praised the stock and raised his price target to $368, CNBC reports. Tesla has a "captivating impact on consumers and shareholders alike," and though there are rational arguments against buying the stock, they probably "won't matter," Potter said.

Tesla, which sold around 76,000 vehicles worldwide last year, overtook Ford in Wall Street value last week. Former GM Vice Chairman Bob Lutz was among those calling the company's share price inflated Monday, reports the Washington Post. "This is the ultimate bubble, which is doomed to burst," Lutz said. "Tesla cars are fine, but the business model is not," he added, noting the company is selling its luxury electric vehicles for less than it costs to make them. Tesla CEO Elon Musk tweeted earlier this month that the company is indeed "absurdly overvalued" if judging by its past, but what the share price reflects is "risk-adjusted future cash flows," reports the Detroit Free Press. (More Tesla stories.)

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