Investing

Tesla's Market Value Nears JPMorgan

Douglas A. McIntyre

Published: July 8, 2020 7:02 am

Tesla Inc. (NASDAQ: TSLA) shares have continued a rise, which made the company more valuable by market cap than Verizon, Netflix and Walt Disney. It is within striking distance of topping the market cap of JPMorgan Chase & Co. (NYSE: JPM), America’s largest bank, and one of the premier financial institutions in the world.

Tesla’s current market value is $258 billion. JPMorgan’s is $281 billion. Over the past 12 months, Tesla’s stock is higher by 496%, while JPMorgan’s is down 19%.

The extraordinary figures are particularly striking because of JPMorgan’s success. Run by one of the most famous financial executives in America, Jamie Dimon, the bank had revenue of $26.9 billion and net income of $2.9 billion in the first quarter. The bank has 250,000 employees.

The electric car company is comparatively very small. Tesla had revenue of $6.0 billion in the first quarter, which is up 32% from the same period a year ago. Of that, $5.1 billion was from automotive operations. Net income was a mere $16 million. If its revenue accelerates at a similar rate for the balance of the year, automotive revenue may reach $25 billion. However, the COVID-19 pandemic could push that number much lower.

Tesla built 102,672 cars in the period, 33% more year over year. It delivered 88,496 cars. Perhaps Tesla’s deliveries may reach 350,000 this year. Once again, the pandemic could hamper that. Contrast that to Volkswagen, the world’s largest carmaker by unit sales, which reached 10.97 million last year.

JPMorgan competes with some of the largest financial institutions in the world, particularly Goldman Sachs and Bank of America. It has more than held its own against them and is likely to be a profit machine for years, if not longer.

Tesla, on the other hand, competes with every large car company in the world. Each either has electric cars or will soon. While the Tesla brand is a powerful one for consumers, it could be overwhelmed by vehicles from much larger manufacturers. Tesla could drop from its spot as the largest electric car company in the world.

JPMorgan’s stock is unlikely to move much over the next few months. Tesla’s continues to rise most days, but, if the history of its share prices is an indication, it also would crash.