Tesla Motors Inc. (NASDAQ: TSLA) will launch its Model X sport utility vehicle (SUV) to great expectations. It is the first diversification beyond its four-door sedan, the Model S. The reception of the new vehicle will start to suggest the perceived value of Tesla in the stock market, where it has an extraordinarily high market cap of $32 billion.
To put Tesla’s market cap in perspective, GM’s is $45 billion. General Motors Co. (NYSE: GM) will deliver more than 8 million cars and light trucks this year. Tesla will deliver less than 60,000.
While the Model X will be a gauge of demand for the next generation of Tesla vehicles, the measure is false. The SUV will sell for over $70,000, and the “performance” version for nearly $100,000. With highly limited production, the Model X will impress car enthusiasts and Tesla’s most bullish shareholders. Beyond that, investors will have to wait for the much less expensive Model 3. The price of this car is expected to be $35,000. It will be a gauge of the mass market demand for Tesla products. That will be a better yardstick of Tesla’s market value.
Arguably, Tesla faces headwinds that are stronger than they were a year ago. First among these is gasoline prices. The cost to fuel a gas-powered car has dropped by 40% in a year. Second, major manufacturers are chasing Tesla’s success as a quickening pace. Either could undermine the forward motion of Tesla as a viable company, which means either could dent Tesla’s $32 billion market value.
Many investors and Wall Street analysts believe that Tesla’s rational market cap should be half of what it is, or even lower. It was at that level in late 2013 before it posted quarters in which Model S sales were more than in the hundreds. A new set of skeptics have pushed Tesla’s share price down to $248, which is off its all-time high of just below $287, but well above its 52-week low of $181.
The Model X could be enough to keep Tesla’s market cap at extraordinary levels, but it only has a few months to show it has the chance of becoming a mass market manufacturer.
ALSO READ: 10 Fresh Analyst Stock Picks Called to Rise 50% or More
Credit Card Companies Are Doing Something Nuts
Credit card companies are at war. The biggest issuers are handing out free rewards and benefits to win the best customers.
It’s possible to find cards paying unlimited 1.5%, 2%, and even more today. That’s free money for qualified borrowers, and the type of thing that would be crazy to pass up. Those rewards can add up to thousands of dollars every year in free money, and include other benefits as well.
We’ve assembled some of the best credit cards for users today. Don’t miss these offers because they won’t be this good forever.
Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
