Tesla: The most valuable car company in the world?

Tesla car

Tesla is in the headlines, yet again, this time as it’s share price hits $500. The latest jump in price was triggered by the news that Tesla will join the S&P500 in December; it is now by far the most “valuable” car company in the world:

In 2020, Tesla has become the world’s most valuable car manufacturer and blown its sales forecasts out of the water.

Tesla soars as much as 13% after the automaker nabs a spot on the exclusive S&P 500 index | Markets Insider (businessinsider.com)

What exactly does “most valuable company” mean?

Market capitalzation is the most common measure, in the financial press, to gauge how valuable a company is. Market capitalization is simply:

Number of shares outstanding (x) the share price

That is, how much it would cost to buy all the outstanding shares of a company. On this measure, Tesla is certainly the most valuable:

Largest, by market capitalzation, car companies in the world.

Another measure is Enterprise Value:

Market Capitalization (+) Total Debt (-) Cash & Cash Equivalents

Enterprise Value is the cost of how much it would actually cost you to buy the company, as you would not only need to buy all outstanding shares but also take on all debts of the company. You could offset some (or all) of the debt by the amount of cash & cash equivalents (i.e. liquid assets) that the company owns. Enterprise Value is often used as the theoretical takeover price of a company.

In this case, Tesla is still the most valuable car company but the other car companies are much closer in value:

Largest, by enterprise value, car companies in the world.

I think we can safely say that Tesla is currently the most valuable car company in the world but maybe not by such a large margin as the financial press reports.

What about revenues, surely a company must have large revenues to justify a large valuation?

Global car companies annual revenues.

Tesla earns a fraction of the other car companies; investors are betting on Tesla growing these revenues substantially over the coming years…..

All data in the spreadsheet shown is provided by Excel Price Feed Add-in market data formulas (Yahoo Finance data).

Building an IG Index watchlist in Excel

Excel Price Feed Streaming Watchlist

IG Index / IG Markets provides over 16,000 different markets to trade, including FX, stocks, indices, commodities and cryptocurrencies. Keeping track of potential trading opportunities within this universe is daunting, you really need a way to filter out which markets you are interested in and monitor just those markets.

This is where watchlists can help.

They help you focus on only the markets that interest you and help quickly give you an overview of the overall financial market. For example, I like to monitor a watchlist of major stock indices, currency pairs and commodities. This is especially helpful when I first arrive at my desk in the morning and want to get a quick overview of global market sentiment.

Brokers, such as IG Index, provide basic tools for building watchlists, for example here is an extract from one of my watchlists on the IG website:

IG Web Platform Watchlist

This watchlist is fine for keeping an eye on a small selection of fields such as % day change but what if you want a more customized watchlist, with filters, sorting, visualizations, custom formulas etc?

This is where the Excel Price Feed Add-in comes in.

You can use the power and customisation of Excel using formulas and visualizations together with the live market data formulas provided by the Add-in to build your own watchlist in Excel.

For example, we can use the daily high and low price to calculate the daily range and visualize where the current price is within the daily range.

In the example below I can see that the current level of the S&P500 is near the high of the daily range (83%) and the range today is 70 points:

We can add more markets and more data, including client sentiment, to give us a live view of the market, highlighting the data we are interested in:

At a glance we can see that the major stock indices are little changed on the day and towards the high of their daily ranges. We can also see that the main mover today is the cryptocurrency Ether.

Using Excel like this we can track and compare markets exactly the way that suits our trading style. Once we have setup our spreadsheet it is updated automatically with live market data so it always gives us a live view of the market.

Download Excel Price Feed today and try it for yourself.

Welcome to our blog

This blog will be a place where we will share our thoughts, ideas and news covering finance, trading and technology. We will post product news, articles about Excel as well as thoughts on developments in trading and financial markets.

We hope you enjoy what we write and we would love to hear from you, so all comments welcome!

Andy.