Musk taunts shorts as Tesla shares surge

Passes Ford in market capitalization

Elon Musk poked fun at short sellers as his electric-car maker’s stock surged to a record, vaulting its market value past century-old rival Ford Motor Co.

“Stormy weather in Shortville...” the chief executive officer tweeted Monday, as Tesla shares climbed as much as 5.7 per cent. The maker of Model S sedans and Model X crossovers saw its market capitalization surge to about US$47.8 billion, US$2.6-billion more than Ford.

Tesla has long been a popular target of short sellers including Jim Chanos, who famously bet early on energy company Enron Corp.’s failure and was proved right. Musk’s company surpassed Ford after reporting worldwide shipments of 25,000 cars and SUVs in the first quarter, exceeding analysts’ estimates. While Ford delivered about nine times as many vehicles in just the U.S. last month, its sales missed projections and shares fell.

“I don’t know if people want electric cars, but people want Tesla,” Ben Kallo, an analyst at Robert W. Baird & Co., said by phone. “I’m not an Elon Musk worshipper, but people that would normally buy a Porsche are buying Teslas right now.”

Short interest in Tesla has risen to 29 per cent of its free float from a 52-week low of 20 per cent in midOctober, according to Markit data. The company delivered fewer than 80,000 vehicles globally last year, compared with 6.7 million for Ford, the second-biggest automaker in the U.S. behind General Motors Co.

Ford, which reported net income over the last five years totalling US$26 billion, towers over Tesla on most metrics. Tesla lost US$2.3 billion during the same fiveyear span. Revenue was US$151.8 billion last year for Ford, compared with Tesla’s US$7 billion.

“It’s mind-boggling that a company that has the global breadth and depth that Ford has is suddenly valued at less than or equal to Tesla,” said Dave Sullivan, an analyst at researcher AutoPacific Inc. “It does not compute.”

Tesla sold about 40,697 vehicles in the U.S. last year, according to an estimate by researcher IHS Markit. Ford delivers that many F-Series trucks about every three weeks.

Investors are betting Musk, 45, can deliver on ambitious growth targets pegged to the mass-market Model 3 that’s rolling out later this year.

The Model 3 will retail for about US$35,000. Musk, Tesla’s chief executive officer, has predicted that with the new, more affordable sedan in the lineup, the company’s annual production could soar to 500,000 by 2018.

Tesla’s gains came as automakers reported March vehicle sales that trailed estimates, with Ford and Fiat Chrysler reporting the biggest declines.

Total deliveries slumped 7.2 per cent at Ford and 4.6 per cent at Fiat Chrysler last month. General Motors sales climbed 1.6 per cent, a smaller gain than analysts projected, while Honda reported a surprise drop.

The results cast doubt on expectations that industrywide U.S. auto sales would bounce back following declines in the first two months of the year. Carmakers are using heavy discounts to try to trim inventory that’s swelled to the highest level in more than a decade. GM has dialed back output of cars like the Chevrolet Cruze, while Fiat Chrysler is eliminating models including the Dodge Dart compact.

“Sales are under forecast, and there were a lot of incentives during the month,” Michelle Krebs, an analyst with Autotrader.com, said by phone. “Before long, we will see more production cuts.”

GM sees the industry’s annualized sales pace, adjusted for seasonal trends, at 16.7 million vehicles, according to Jim Cain, a company spokesman.

The automaker cut its projection from 17 million, which it had given in a statement earlier Monday. Analysts estimated a pace of about 17.2 million.