Tesla is the most valuable US automaker, according to market cap
After two strong days of trading, Tesla's market capitalization surpassed both Ford and General Motors.
Much like Camelot, the stock market is a silly place. According to the numbers it produces, Tesla is now worth more than both General Motors and Ford Motor Company. Sounds silly, right?
Well, it is, and it isn't. It's true that Tesla's two-day rise in the stock market has increased its market capitalization. On Monday, a bump to $47.46 billion pushed its market cap past Ford's $44.89 billion (its stock went down on Monday, too). On Tuesday, its market cap rose yet again, to $53.06 billion, surpassing General Motors' $49.80 billion.
In case you're not up to date on all the hip Wall Street lingo, market capitalization is the total market value of a company's outstanding shares, which includes shares held by its shareholders, including share blocks and restricted shares. Multiply the number of outstanding shares by the current market price of a single share, and boom -- market cap.
When investors hold different companies accountable in different ways, you get strange occurrences, like this market cap hullabaloo.
That's just one figure, though. Does it mean Tesla is really more valuable than GM and Ford, which are building millions of cars, and have been for years? To some people, yes. To others, no. But it's important to understand how this shift came about.
Recent dips in Ford and GM stock have been related to events taking place in the present. Last month's sales figures weren't as gangbusters as forecasters hoped. GM was up 1.6 percent year over year, helped in large part by boosts in Buick and GMC while Chevrolet and Cadillac declined. Ford was down 7.2 percent, about on par with forecasts, but sales declines are never really good news. Amid the bad news, the market reacted, and stock prices dipped a bit.
On the other hand, you've got Tesla's stock, the price of which seems less rooted in the reactionary and more in terms of future potential. After announcing records for both quarterly sales and quarterly deliveries, the stock did rise, even though sales in the US were down. With the hype train for the forthcoming Model 3 moving full steam ahead, and likely thanks to some fresh cash infusions, investors remain bullish about the company's future, and so its share price keeps rising, and with it, the market cap.
As of this writing, Tesla remains ahead in market cap, at $53.03 billion ($303.66 per share) to GM's $49.54 billion ($34.22 per share).