Tesla Model Y (VCG / Getty Images)

Tesla’s market share is down, but its valuation is still sky-high

Tesla’s competitors are elbowing in, but it’s still easily worth more than Ford and GM combined

7/11/24 3:08PM

The New York Times reported yesterday that Tesla’s share of the US electric car market fell below 50%:

Tesla accounted for 49.7% of electric vehicles sales from April through June, down from 59.3% a year earlier as the company led by Elon Musk lost ground to General Motors, Ford Motor, Hyundai and Kia, the research firm, Cox Automotive said. It was the first time the company’s market share fell below 50% in a quarter, according to Cox.

I’d like to share a few stats on Tesla, Ford, and General Motors:

Tesla sells fewer cars than General Motors and Ford. Tesla is also worth ~$500 billion more than General Motors and Ford, combined. Why is that? The market has, for a while, valued Tesla as some combination of a technology company and a growth company due to its position as the market leader in electric vehicles and its high revenue growth.

In April, when the “growth” argument weakened after Tesla posted an 8.5% annual decline in deliveries, I pointed out that because Tesla’s margins were in line with those of traditional auto manufacturers, as opposed to tech companies, and Tesla’s deliveries were flatlining, shouldn’t Tesla’s valuation fall more in-line with auto manufacturers?

And now, Tesla has slipped below 50% market share in the US, its biggest market. I guess, if you wanted, you could have previously made the argument that EVs are inherently more valuable than regular cars because “EVs are the future” (even though their gross margins are similar), and give Tesla a premium valuation as it dominated the EV market. But Tesla now only represents half of the EV market. As EV adoption continues to grow, and competitors increase their EV sales, Tesla’s market share will likely continue to decline (even if its total deliveries increase). My question is this: at what point will the value of Tesla’s EVs converge with the value of other car companies’ EVs? Because right now, either 1) Tesla’s cars are overvalued or 2) competitors’ EVs are undervalued.

Of course, maybe I’m overthinking this, and Tesla will always be worth more than its competitors, combined, regardless of sales, because it’s Tesla, and Tesla has Elon Musk, and you can’t assign a dollar value to their CEO and his… engaged following.

Luke Kawa

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SpaceX gets a wave of bullish ratings from Wall Street analysts

SpaceX received more than a dozen positive analyst calls on Tuesday — including from major Wall Street banks — as they initiate coverage on Elon Musk’s space and AI company.

SpaceX went public on June 12 at a $2.2 trillion valuation, the largest debut in history. While the company hasn’t yet posted a profit, it seems to have convinced Wall Street that it will get there and grow its valuation on the way.

Of the at least 17 analysts that gave a rating on Tuesday, all but one gave it a “buy” or “outperform” rating. MoffettNathanson was "neutral."

The ratings come as SpaceX joined the Nasdaq 100 index, a benchmark tech-heavy basket of companies that underpins millions of portfolios. The inclusion adds built-in demand for the stock from index funds and ETFs.

Still, SpaceX fell more than 5% on Tuesday amid a broader sell-off, and is currently effectively flat from its opening price of $150 a share.

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Nike sinks to lowest level since 2014 after warning of “challenged” sales environment in Q4 report

Did Nike do it?

Investors had a mixed reaction after the global sports apparel company reported its fourth quarter earnings on Tuesday after the bell. Shares initially rose 5% as Nike beat out Wall Street expectations amid a hefty tariff refund bonus. However, the stock then sank to its lowest level since August 2014 in postmarket trading.

Here are the Q4 numbers:

Revenue of $11.0 billion (estimate: $10.8 billion).
Adjusted earnings per share of $0.20 (estimate: $0.12).

Ahead of this report, Nike warned that results would be flattered by a one-time tariff refund (now estimated at roughly $0.52 per share for the bottom line). That gave the company an extra cushion in snapping its streak of seven quarters of year-over-year profit declines.

Over the past year, the company had been punished by tariffs on imported goods, stagnant consumer spending, and increasing competition from other footwear brands like New Balance, Adidas, and Hoka.

Outgoing CFO Matthew Friend deemed it an “increasingly challenging operating environment, where sell-through remains challenged.”

Tesla’s market share is down, but its valuation is still sky-high

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