Tesla Is Now the Second Most Valuable Automaker in the World
Will Elon Musk's company keep rising or eventually crash?
The success of Tesla has always been an anomaly in the auto industry, with experts constantly betting on the failure of Elon Musk’s electric vehicle company. In April 2019, a prominent investor said, “This is the beginning of the end [for Tesla].” In May, Digital Trends proclaimed that “Tesla is now doomed.” And in August, a Forbes contributor decreed, “Tesla has failed massively as a public company.”
On Wednesday morning, Tesla didn’t just silence its critics, it blew away all expectations by becoming the second most valuable automaker in the world, as reported by The Wall Street Journal. That again: Tesla’s market value topped $100 billion, putting it above Ford, Hyundai and even Volkswagen, with only the massive Toyota Motor Corp. besting it at around $200 billion.
As the Journal writes, this is particularly good news for CEO Elon Musk, if the valuation stays above that mark, because it “could start unlocking a more than $50 billion pay package” approved by Tesla shareholders. But if you haven’t heard, Musk is already rich, and there’s a much larger significance to this moment than one person’s fortune.
On Friday, Reuters reported that the National Highway Traffic Safety Administration would review a petition concerning 500,000 Tesla vehicles that could have “unintended acceleration” issues, though the petition only cites 127 complaints. On Monday, Tesla took not just a strong defense stance, stating that there is no such problem; the company actually went on the attack, the first line of their response stating: “This petition is completely false and was brought by a Tesla short-seller.”
Basically, a “short seller” is someone who borrows stock, sells it, then buys it back when the price falls. As Tesla is currently on an unanticipated financial tear, boosted by strong quarterly results and expansion like its new Chinese factory, the allegation of short selling is certainly not out of the question.
Furthermore, some high-profile analysts have expressed regret over betting against Tesla, so a person could conclude that as Tesla achieves greater success, the opposition will also be greater, and short-selling is one manifestation.
But that, as with the stock market, is speculation. Only time will tell if Tesla can keep up the momentum, if the NHTSA will turn the petition into an investigation and what effect, if any, that will have on Musk’s EV empire.
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