The IPO was priced at $17, valuing the company at about $1.7 billion. Today, Tesla (ticker: TSLA) is the second-most valuable car company in the world, behind only Toyota Motor (TM). Tesla stock recently surpassed $1,000 a share and the companyâ€™s current market capitalization is roughly $180 billion.
Over the past decade, Tesla stock has earned investors 5,677%, or about 45% a year on average. Wow.
Toyota, of course, still dwarfs Tesla in terms of sales. The Japanese giant sells about 9 million vehicles each year and generates sales of about $234 billion. Tesla will sell a few hundred thousand luxury cars in 2020, generating about $26 billion in sales.
Tesla might be smaller, but its growth is prodigious. Sales came in at less than $120 million in 2010 and are up by a factor of more than 200 over the decade. Toyota sales have grown, too, but nowhere near as muchâ€”from about $200 billion in 2010.
Tesla has overcome a lot to make it happen, and there were a lot of naysayers.
Electric-vehicle range, for starters, was a limiting factor for the adoption of battery-powered cars. Tesla recently cracked the 400-mile-per charge barrier, the first EV maker earn that distinction from the EPA.
Another EV risk was a lack of a national charging infrastructure. Today Tesla owns a supercharging network that spans the country. Also, EVs are expensive, relative to gasoline-powered cars. The price of a Tesla Model 3 comes in a little under $38,000.
True, the company has burned through a lot of cash to make it happen, but it has generated positive free cash flow five out of the past seven quarters.
CEO Elon Musk has had to ruffle some feathers to make it all happen. Most recently, he threatened to sue Teslaâ€™s home Alameda County to reopen the companyâ€™s California manufacturing plant amid the global pandemic. The aggressive stance was questionable, but consistent with Muskâ€™s very powerful tunnel vision.
His vision is to solve humanityâ€™s sustainable-energy crisis, a plan he laid out in a 2013 TED Talk. That seems to be his raison dâ€™ĂŞtre. Along with electric cars, Tesla makes solar panels for homes and battery-storage products, all steps consistent with that original vision.
What might be more impressive than the sales growth or stock returns is that nearly every other major auto maker, including General Motors (GM) and Volkswagen (VOW.Germany), are trying to emulate Muskâ€™s EV-first strategy. Tesla has disrupted and altered an enormous, centuries-old industry.
The stock is having quite an anniversary party. Shares are up more than 130% year to date, surpassing comparable returns of the S&P 500 and Dow Jones Industrial Average. Toyota shares are down roughly 10% year to date. Tesla stock was up 0.1% to $960.31 shortly after the open on Monday.
The successful disruption, business execution and stock gainsâ€”including the incredible gains during the pandemicâ€”landed CEO Musk on Barronâ€™s list of top business leaders. At times he may be hard to fathom, but the business results are hard to argue with.
Looking ahead, over the near term, investors will be watching the new Model Y shipments as well as the companyâ€™s â€śbattery day,â€ť slated for later in 2020, where Tesla will talk about its battery technology versus the competition.
Over the coming years, Tesla will try to branch out in autonomous taxis as well as introduce new models including heavy- and light-duty trucks.
Write to Al Root at firstname.lastname@example.org