Having long surpassed Detroit’s “Big Three” to become the most valuable car manufacturing company in the United States, Tesla made history last week by overtaking Toyota to become the most valuable automaker in the world. After a brief comeback from Toyota, Tesla re-took the top spot this week, closing at a market capitalization of $184 billion on Wednesday, $4.3 billion above Toyota.
Over the past 12 months, Tesla’s share price soared by nearly 350 percent, reaching a valuation of more than seven times its 2019 revenue. To put that in perspective, Toyota is currently valued at around 0.6 times its annual revenue, which is why many people consider Tesla hopelessly overpriced. Looking at delivery/sales figures seemingly supports such claims. While the market leader in electric cars delivered less than 400,000 cars in the 12 months ended March 31, Toyota sold nearly 10.5 million vehicles during the same period, about ten times as many as Tesla has built in its lifetime.
While Tesla’s valuation certainly is ambitious, bullish investors argue that the company isn’t valued as a car company, but rather as a technology company that happens to build cars. Looking at Apple, the mother of all tech companies, for comparison yields a different perspective. With a market cap of $1.52 trillion, Apple is worth more than nine times its revenue for the trailing twelve months.