Tesla: The most valuable car company in the world?

Tesla Model S 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).

Pre-market stock prices

Stock markets are generally only open during specific times, the “trading day”. For example, the US market is open from 9:30am to 4:00pm (EST).

However, this is not the only period when trading takes place and when prices can change, there is also the pre-market which is “open” before the regular market opens.

This is a time of very little liquidity however trading during this time can enable you to take advantage of any news or events that happen outside normal market hours.

Yahoo Finance provides prices during this period, the pre-market (or before hours) prices.

For example, below we can see the current “before hours” price for Apple stock is 364.00 and the price has moved -2.53 from yesterdays close price of 366.53:

Apple stock price: live and pre-market

We have recently added some new Excel formulas to the Add-in to provide pre-market prices in Excel:

  • EPF.Yahoo.PreMarketPrice
  • EPF.Yahoo.PreMarketChange
  • EPF.Yahoo.PreMarketChangePercent
  • EPF.Yahoo.MarketState

This last formula is used to find the current state for the market eg. whether we are in regular or pre-market trading hours: “REGULAR” or “PRE”.

The example spreadsheet below shows the formulas in action, you can see column C uses the PreMarketPrice formula which references the ticker in column A:

Excel Price Feed pre-market stock prices

We hope you find these new formulas useful and as ever keep your feedback coming, preferably on the Support Forum or leave a comment below.