People are dumbfounded how Tesla's (TSLA) stock can be worth almost as much as GM (GM) and Ford (F) combined. That's right, Tesla's got a market cap of $82 billion while General Motors' is $51 billion and Ford is $36 billion.
I am dumbfounded, too, dumbfounded about why Tesla's not up even more than it is. This is a market that thrives on growth. Tesla has it in spades. GM doesn't have much at all and Ford is actually on the decline.
Plus, Tesla's got a growth business in China to beat the band, while Ford's China business is in trouble and GM's seems almost static to me. The fact that Elon Musk did a jig last night is being viewed as something that's cocky, hilarious even. Who can blame the guy? He built that plant that can produce 150,000 cars in 10 months. Ford and GM would be struggling to get a similar plant open in 18 months.
And Musk says the plant can reach 250,000 capacity maybe in a couple of years. Even more bullish.
More important, these kinds of comparisons are completely worthless. I remember in the 80s when Merck (MRK) , Coca-Cola (KO) and PepsiCo (PEP) passed the valuation of first, U.S. Steel (X) and then GM and Ford, and we were all agog that it just seemed wrong.
That's silly. This bull market, the one that began in 1981 when interest rates were about to peak - the prime crested at 21.5% in 1982 - has been about one thing and one thing only: Growth. If you have it, your stock is worth more than a similar company that doesn't have it. And unless that company without growth can be taken over - and I think neither Ford nor GM has a chance to have that happen - then it's pretty much worthless to growth buyers, and value investors just want the dividend and hope they are being paid to wait. Hope should never be part of the equation. Save it for the ballpark.
I got bullish on Tesla about 150 points ago when it became clear that it can make money, maybe make a lot of money next year because the company had an upside surprise that the bears did not expect. Right now you are getting another wave of conversion from bears to bulls, as 27% of the float is sold short, which is way too high for a company with earnings that can raise $2 billion on a dime, something that might have been impossible just a year ago.
What else made me bullish? Elon got serious and stopped tweeting and taunting. Solar became a positive, not a drag. And someone threw a rock at a window at a Tesla pick-up truck, it went through it, and no one cared. Deposits skyrocketed.
What more can you ask for?
I think the Ford-GM versus Tesla is just a parlor game. Tesla's got electric vehicles, that's the future. GM has an electric vehicle that it seems no one wants. Who the heck knows what Ford is up to and, more important, who cares?
Wake me when Tesla's double the value of Ford and GM put together. That's when I might take pause in my bullishness, but only if GM and Ford gain in value. If they decline, a double's too easy.
(PepsiCo is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells PEP? Learn more now.)
