Will Tesla Be Taken Over By Ford, Toyota, or Apple?
Tesla Motors was established by Elon Musk, founder and former owner of the online cash service PayPal. They have been at the forefront of electric car technology. With Google’s self-driving car nearing its move to market, Tesla Motors has competition.
Despite the new products that the company has recently released, they are not doing very well. As a result, there is already talk in the business world about which investors may be taking over the company. NYU professor Scott Galloway had stated in a podcast interview recently that “I think investors are getting fed up. My prediction is within 12 months Tesla is sub $100 per share and it probably gets acquired because there’s real value there.
These are the potential buyers and their revenue from last quarter:
- Ford – $38.2 billion
- Toyota – $196.4 billion
- Daimler AG – $56.3 billion
- Alphabet – $772.6 billion
Tesla Motors was looked at as the pioneers of the modern electric car. While two years ago, the company’s value hit a whopping $65 billion two years ago, it has recently burned through its cash flow and lacked any significant turn of profit.
Why this is bad
Failing to turn a profit tends to happen for business at one time or another. But at the rate that Tesla has been going, investors are contemplating completely pulling their funding for the company.
Because of how the company has been handled so far, its $65 billion value has dropped by as much as 50%. That leaves it at a current valuation of $33 billion.
Even if the company falls to a price at which more companies are willing to buy, there’s no telling if anyone will stay invested. This continued decrease in value may potentially spell the end of Tesla Motors in the very near future.
Apple, established by Steve Jobs and Steve Wozniak, is a pioneer in many fields of technology. With their constant advancements, it’s understandable one might see the tech giant throw their hat into the ring. With the market value of $819 billion, investing in the company before they acquire Tesla may be a good idea.
Both companies have a variety of cars on the market for consumers. According to equity strategy David Whiston, the only way either auto manufacturer would consider the purchase is if the valued dipped somewhere at $10 billion or below.
The purchase “could only potentially happen if Tesla’s stock fell well into the sing digit billion market cap because it’d be too expensive for GM or Ford otherwise.” And unless that happens, both companies would rather spend their time competing than figuring out when to purchase.
In The Future?
Not since the collapse of the housing market have I myself seen such a decline in business. The desperate situation might still nab the attention of a car company, but Musk might present a problem.
Elon Musk is an unpredictable individual and still owns at least 22% of Tesla Motors today. Whiston told Fortune Magazine that “he’d have to be willing to sell his stake and in my opinion, that’s something he would only do if it was the only way to keep Tesla alive.”
Elon Musk is known the world over for his sometimes outlandish behavior. One social media post from rapper Azealia Banks suggested that Musk dropped a few hits of acid with her at his house.
Musk once made accusations about a diver who was tasked with saving children stuck in a cave. One might have assumed that it was his unused miniature submarine that drew the business owner’s ire that day, but to this day no one can explain why he acted that way.
According to analyst Gene Munster, “At times, Musk appears to be working against himself. At the core, we believe he wants to prove his doubters wrong, but many of his actions strengthen the case against him.”
With so much of Elon Musk’s focus on SpaceX, he doesn’t seem too fond of Tesla Motors at the moment. Much of his time is now invested in helping push his space exploration company to the next level.
SpaceX is currently working on plans for a mission to Mars. With our current level of space technology, travel to the Red Planet is still hypothetical. For that reason, Musk does not hesitate to let people know his planned mission “will probably result in death.”