From the Street:
Tesla Deserves a Facebook-Google Market Cap
NEW YORK (TheStreet) -- It's acceptable to refer to Internet advertising companies like Facebook and Google as tech companies. In reality, these ad companies do not qualify as real tech. Want to see real tech, look no further than Elon Musk's efforts at Tesla, SpaceX and SolarCity .After hitting $265.00 earlier today the stock has backed off to only up $2.81 at $250.81.
Facebook made a lot of noise with its $19 billion acquisition of WhatsApp and its 450 million users; some believe it was a brilliant acquisition as it enables Mark Zuckerberg to mask the user slowdown at Facebook's core site but others see the buy as evidence that Wall Street is drunk on social.
Facebook's current growth rate looks great but consider that the total U.S. ad spending on media was $171 billion in 2013. This figure makes Facebook's market cap of $178 billion look ludicrous. Only $42 billion of the $171 billion was allocated to digital. By 2017, it's expected that $61 billion will be spent on digital advertising. Digital advertising is a small component of the economy.
And guess who controlled $30 billion of the $42 billion spent on digital ads in 2013? Google. That leaves $12 billion spread among Facebook, Twitter, LinkedIn, Yelp and any other Internet company fighting for relevancy.
The advertising pie is basically a fixed amount. It doesn't fluctuate with volatility. These numbers should scare a long term Facebook investors and they should strike fear into an investor in the second- third- fourth-ranked social networks. So, if Facebook operates in a $42 billion industry and is rewarded with a $178 billion market cap, where does that leave Tesla?
As Tesla's Gigafactory announcement approaches, we think Wall Street is in the process of shifting its label of Tesla from a car company to a tech company. Musk says the giga factory will build battery packs for future mass-market electric cars.
Owning Tesla in front of the Gigafactory announcement may be similar to owning Apple ahead of the original iPhone announcement. The electric utility industry is a trillion dollar industry.
The global automotive industry is a trillion dollar industry. Even after Tuesday's tremendous stock performance, Tesla's market cap sits at a paltry $31 billion compared to Facebook at $178 billion, Google at $410 billion and Apple at $470 billion. Tesla could be headed to $1,000 over the next 3 years to 5 years based on these market cap comparisons. Even at $1,000 a share, Tesla would have a smaller market cap than Facebook....MORE
We may have to dust off our Nov.-Jan. Shorting Tesla series of posts (23-28% gain woohoo)
/ party like it's 1999/
