Tesla becomes biggest automaker in US history by market cap despite struggling to scratch out a profit

Electric car maker Tesla became the first $100 billion publicly listed US carmaker on Tuesday. It eclipsed the combined value of US auto giants General Motors and Ford, despite generating far less revenue than its competitors.

The company’s shares climbed as much as 1.4 percent in after-hours trading on Tuesday to $555 after closing the regular session up 7.2 percent.

Tesla has seen its stock more than double in the last three months, fueled by a rare quarterly profit in October of just $143 million, as well as news of production ramp-up in its China factory and better-than-expected annual car deliveries.

Tesla's market value is surprising considering that its revenues are dwarfed by its non-electric rivals. Its yearly revenue for the quarter ending September 30, 2019 was $6.3 billion, a 7.63 percent decline year-over-year.

Ford Motor Company's revenue for the same period was almost $158 billion, but the automaker's market cap is about a third of Tesla's, standing at $36.5 billion as of Wednesday.

General Motors revenue for the twelve months ending September 30, 2019 was $144.8 billion and the company is valued at around $50 billion.

Tesla's $100 billion valuation means a huge payout for CEO Elon Musk if the firm’s market value stays above the mark for a sustained period.

Analysts, however, wonder how long the stock rally will continue for, with some calling it “extremely unusual.”

Bernstein analyst Toni Sacconaghi said in a note seen by Market Watch that he looked back 40 years at instances where similar large-cap stock moves have occurred.

According to him, while it is not unheard of in other sectors, the sharp gain “is extremely unusual in the autos and industrial sectors.” The analyst who rates Tesla stock the equivalent of neutral, pinpointed three examples before Tesla’s run. Those are Ford Motor and Daimler in the wake of the global financial crisis, and Fiat Chrysler in 2017.

The aftermath of those “periods of dramatic outperformance” is mixed, Sacconaghi said. “On net, we continue to believe near-term risk/reward is skewed to the downside for Tesla.”

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