Tesla just blew past Warren Buffett's Berkshire Hathaway in market value. Here's why that's astounding
- Tesla's market capitalization soared as high as $567 billion on Tuesday, easily surpassing the roughly $544 billion
market capof Warren Buffett's Berkshire Hathaway.
- Shares in
Elon Musk's electric-vehicle company have rocketed up more than 500% this year, while Berkshire stock has risen less than 2%.
- Tesla's larger market cap is surprising, given Berkshire earned $255 billion in revenue last year, more than 10 times
Tesla's $25 billion.
- Buffett's company also had enough cash at the end of March to buy Tesla outright, as the automaker's market cap was below $100 billion at the time.
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Tesla stock rose as much as 4% on Tuesday, boosting its market capitalization as high as $567 billion. It blew past the roughly $544 billion market cap of Warren Buffett's Berkshire Hathaway on the way.Read More: A portfolio manager at $38 billion Baron Funds shares his checklist for investing in the most promising SPACs — and names 3 of the booming 'blank-check companies' he finds attractive now
In contrast, Berkshire's shares have climbed less than 2% this year, trailing a 3.7% gain for the benchmark Dow Jones index over the same period.Tesla's market cap exceeding Berkshire's by about $20 billion is striking given the dramatic differences in their scale and financial strength.
Berkshire owns scores of businesses including See's Candies, Geico, Precision Castparts, and the Burlington Northern railway that collectively employ more than 390,000 people.Read More: The investment chief at a $20 billion family office explains how he allocates assets for the ultra-wealthy — and shares 3 outperforming mutual fund managers on his buy list It also boasts a roughly $230 billion equity portfolio that includes more than $100 billion worth of Apple stock and billion-dollar stakes in American Express, Bank of America, Coca-Cola, and other blue-chip companies.
Buffett's company earned $255 billion in revenue and booked $73 billion in investment gains last year, fueling $81 billion in net income. Moreover, it held $137 billion in cash and short-term investments at the end of March — enough to buy Tesla in its entirety at the time, as its market value had tumbled below $100 billion during the coronavirus crash.
Meanwhile, Tesla had about 48,000 full-time workers last year, less than an eighth of Berkshire's workforce. It also generated about $25 billion in sales — a tenth of Berkshire's revenue — and posted a $900 million net loss. Musk's company also had only $6.6 billion in net assets last year, less than 1/60th of Berkshire's $425 billion.Read More: Morningstar's top stock pickers say these are the 10 highest-conviction stocks they recommend — which top fund managers recently piled their money into
Tesla investors are valuing the automaker at 23 times last year's sales, because they're betting on phenomenal growth, wagering it can dominate multiple
Yet it's still surprising that Tesla, at its current stage of growth, is now more valuable than one of the world's largest and most successful companies.Here's a chart showing how quickly Tesla caught up to Berkshire and surpassed it in market value:
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