Tesla's Enviable Decade

With all the attention that buzzy new electric vehicle stocks like Nikola Motors and Tortoise Acquisition Corp. (soon to merge with Hyliion) have been getting, it's easy to forget about the market-beating run that the stock of EV-pioneer Tesla has had over the past decade.

Today was the 10th anniversary of Tesla’s initial public offering. Priced at $17 a share, the IPO valued the company at roughly $1.7 billion. Today, Tesla stock trades for close to $1,000, and gives the company a whopping market capitalization of about $180 billion. That amounts to a 5,677% return, or about 45% a year, over the past 10 years. Not bad at all.

It has made Tesla second-most valuable car company in the world,  behind only Japan's Toyota Motor. 

Tesla still has a ways to go in coming close to matching Toyota's revenues or sales volume, but its record of growth is unmatched in the auto industry.

Here's Barron's Al Root today:

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 much—from about $200 billion in 2010.

Tesla has achieved many milestones along the way. Al notes that Tesla was recently the first company to break the 400-mile-per charge barrier,  it now owns a national network of  superchargers, and—although still rich relative to gasoline-powered cars—it's gotten the price of its cheapest model down to below $38,000. It's spurred a wave of EV models from century-old auto makers like General Motors and Volkswagen.

And while plenty of growth potential remains, Tesla's business results have begun to show signs of maturing: The company has generated free cash flow in five of the past seven quarters.

Whether its earnings will grow into the hefty valuation that Tesla stock commands continues to be a hot debate on Wall Street. But the company and its shares have proven naysayers wrong again and again over the past 10 years.

"The coming decade should be just as interesting," Al wrote today. Read the rest of his article here.