What happened

On an only modestly red day for the stock market, with major indices all down just a fraction of a percent each, shares of automotive stocks are getting hurt more than most. Tic-tac-toe, three in a row, shares of Ford Motor Company (NYSE: F), Tesla (NASDAQ: TSLA), and Nio (NYSE: NIO) are down 2%, 1.9%, and 5.9%, respectively.

Each of the three ran into a fender bender of modestly bad news today.    

So what

In the case of electric vehicle (EV) specialists Tesla and Nio, it's basically Wall Street to blame for today's declines. Granted, yesterday's announcement that Elon Musk has apparently decided he will buy Twitter after all is probably still having an effect on Tesla stock -- but there's new news, too.

Specifically, this morning, Japan's Mizuho bank lowered its price target on Tesla stock, citing "logistics challenges" that prevented the company from hitting its targeted delivery number for the last quarter. Although Tesla did still grow its deliveries 42% year over year, and grew its production numbers 54%, the miss necessitates a price target cut to $370 per share, says Mizuho today in a note covered by StreetInsider.  

Similarly, Mizuho cut its price target on China's Nio by about 5%, to $40 a share, citing -- surprise! -- "softer SepQ deliveries" and consequently lower expected earnings in the quarter. Indeed, across the EV industry, Mizuho says getting the needed parts to build EVs, and getting transportation to deliver them where they're going, remains "a challenge." Long term, Mizuho is still a supporter of both Tesla and Nio stocks and maintains buy ratings on both companies.  

Mizuho just isn't sure the stocks will go up as much as it previously hoped they might.

Now what

Now, what about Ford -- which, for all its electric ambitions, still remains today primarily a maker of SUVs and trucks powered by the venerable internal combustion engine? Well, earlier this week, as you probably heard, Ford reported a 9% decline in sales for September -- and an 18% decline in trucks. The company blames parts shortages for sidelining as many as 45,000 vehicles that remain only half-built because they don't have the parts needed to complete them.  

For that matter, even Ford's small but growing electric operation is apparently not immune from the problems plaguing its competitors. Last night, Ford announced that it's raising the price of its base model F-150 Lightning electric pickup truck by $5,000 -- not because it wants to, but because it has to, in order to absorb the costs of "supply chain constraints, rising material costs and other market factors." 

After this hike and the first round of price increases, announced less than two months ago, the price of the F-150 Lightning is now up an astounding 30% over its originally announced base price of just under $40,000 last year.

Now, from one perspective, Ford charging more money for a truck might be considered a good thing -- more money for Ford, right? But if all the extra money coming in one door immediately goes out another to pay Ford's suppliers, then there's really no net gain for the company or the stock. To the contrary, as Ford F-150 Lightning prices rapidly run up from "It's a bargain!" territory to "Hmm, maybe I should just buy a Rivian truck" levels, the good publicity and sales advantages Ford initially enjoyed from introducing the Lightning are already starting to evaporate.

Granted, at a lowly 4.3 times trailing earnings, I still think Ford stock looks cheap enough to buy. But based on today's bad news, I can't blame other investors for deciding Ford might actually need to get a little bit cheaper. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock fell today appeared first on The Motley Fool Australia.

Electric vehicles (EVs) will be one of the large secular growth stories of this decade. BloombergNEF researchers estimate that annual unit volumes for plug-in EVs will grow from 6.6 million in 2021 to 20.6 million in 2025.

Considering how much a new car costs, this is a trillion-dollar revenue opportunity for companies to go after.

That is why so many automakers -- from EV pioneer Tesla (NASDAQ: TSLA) to upstarts like Rivian to legacy automakers like Ford (NYSE: F), Volkswagen, and Toyota -- are investing so much money in their EV product lines.

But which stocks among these automakers provide the best investment opportunity at current prices? Let's look at two key players -- Tesla and Ford -- and identify which stock looks most likely to 5x in the shortest time period.

Tesla: The EV pioneer

You probably know Tesla as the company that has driven the EV revolution over the past 10 years. With four models currently for sale and a few more in development, Tesla is the EV leader in many important markets around the world.

In 2021, the company delivered 936,000 vehicles to customers and has grown its production capacity at a rapid rate over the past decade.

Last year, the company reported $53.8 billion in revenue and $6.5 billion in operating income. With $17 billion in cash shoring up its balance sheet, investors are betting that Tesla can capture a good chunk of the projected bump in annual EV sales, driving its annual deliveries into the millions.

Tesla is also making bets on self-driving technology, solar energy, and battery storage deployments. However, it is difficult to estimate how much financial value these segments will provide considering solar/battery storage has negative gross margin right now, as well as the uncertainty around full self-driving technology, which many researchers think is years and years away. For now, it is probably smart for investors to not include these divisions when valuing Tesla stock.

As of this writing, Tesla has a market cap of $730 billion, one of the largest in the world. Tesla stock has a trailing price-to-sales ratio around 14 and investors are already pricing in a lot of growth over the next few years.

In order for the stock to 5x to a market cap of $3.65 trillion, Tesla would need to greatly exceed investors' high expectations.

Ford: Making the EV transition

Unlike Tesla, Ford is a legacy automaker that still makes the majority of its sales from cars with internal combustion engines (ICEs).

Over the next decade, the company plans to invest heavily in EV operations, with $50 billion in planned spending from now until 2026. According to management, this will enable the company to get to 600,000 in annual EV manufacturing capacity next year and 2 million by 2026.

Looking at Tesla's financials as a comparison, this could translate into over $100 billion in EV sales for Ford if it can execute on these objectives.

To do so, Ford has a robust lineup of EVs, including the Mustang Mach-E, F-150 Lightning, and E-Transit commercial van. There is a lot of uncertainty, though, as the company has not gotten many vehicles out on the road.

But like with Tesla and the other automotive manufacturers, with so many new sales to go after, there is a gigantic financial opportunity here.

As of this writing, Ford has a market cap of $54 billion and $29 billion in cash and equivalents. In order for the stock to 5x, investors would need to value Ford at a market cap of $270 billion, or less than 10% of what Tesla would need to be valued at in order to achieve the same jump.

A matter of math

I think it is clear that Ford is more likely than Tesla to 5x, simply because Tesla's stock is valued so richly.

If Ford is able to hit $200 billion in annual sales after ramping up EV production and raise its operating margin to 15% (which is close to Tesla's), the company would be generating $30 billion in operating income by 2026.

Using a typical earnings multiple for automakers of 10, that equates to a market cap of $300 billion, which clears the 5x hurdle.

Now let's do the same calculation for Tesla. In order to hit an earnings multiple of 10 on a market cap of $3.65 trillion (Tesla stock's 5x hurdle), the company would need to be doing $365 billion in operating income a year.

Assuming an operating margin of 15%, this would require over $2.4 trillion in annual sales. Achieving a 5x jump does not seem reasonable unless you think investors will perpetually value Tesla at an earnings multiple much higher than the rest of the industry. 

I don't think either Ford or Tesla will 5x within the next five years. But if I had to bet on one stock doing this, it would be Ford, simply because of the starting valuation.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post More likely to 5x first: Tesla vs. Ford? appeared first on The Motley Fool Australia.

There's no question the $4 trillion energy sector has been home to the best-performing stocks on the market recently.

Over the past year, energy stocks have gained 72% on average while the next closest sector, utilities, rose less than 15%. In comparison, the broad market S&P 500 Index (SP: .INX) index lost 1%, and that started long before Russia invaded Ukraine.

It hasn't been much different in 2022 either, with the oil and gas stocks, in particular, leading the way. Energy is again on top with a 58% gain as utilities again ranked second with a less than 5% increase in value.

Yet over longer periods, the high cost of exploration and resource exploitation has made the energy sector a lagging sector for investors.

Technology stocks were the market darlings only until recently and over the past decade energy stocks ranked dead last with simple double-digit increases when virtually every other sector was sporting triple-digit gains. 

Oil and gas stocks are the stars these days, but is now the time to buy them?

Beating up on big oil

President Joe Biden recently said he hoped Americans could come out of the current energy crisis less dependent on fossil fuels. Alternative energy sources are already a rising component of the world's energy consumption, about 30% of the total, and that number is continuously growing.

Where the energy sector accounted for 29% of the stocks weighted in the S&P 500 in 1980, today they represent just 3.7%. Back then, seven of the top 10 stocks in the popular index were oil and gas stocks, led by ExxonMobil (NYSE: XOM); today there are none. 

And in a sign of how the world is further changing, Exxon was booted out of the Dow Jones Industrial Average in 2020 -- a spot it has held for nearly 100 years -- leaving only Chevron (NYSE: CVX) to represent the industry. Oil and gas stock investing isn't what it used to be.

Oil, oil everywhere

Yet that doesn't mean you shouldn't invest in the energy sector. It is simply too ingrained in the global economy to disappear.

For example, the U.S. Energy Information Association forecasts global "conventional" light-duty vehicles will nearly double from 1.31 billion in 2020 to 2.21 billion at their peak in 2038, but that will still far outstrip electric vehicle usage.

General Motors (NYSE: GM) has said it wants to produce only electric vehicles (EVs) by 2035 while Ford Motor Company (NYSE: F) is shooting for 40% of its fleet.

Tesla (NASDAQ: TSLA), in contrast, says it wants to sell 20 million EVs by 2027. However, the EIA predicts EV usage will grow from just 0.7% of the global LDV fleet to 31% in 2050, or just 672 million vehicles. Not an insignificant number, but still trailing gas-powered vehicles.

Petroleum products account for about 90% of all energy usage in the U.S. transportation sector, with gasoline accounting for 56% of the total.

Distillates, primarily diesel fuels, accounts for another 24%, and jet fuel, 9%. And jet fuel usage is growing rapidly with the EIA expecting consumption to increase at a faster rate than any other liquid transportation fuel through 2050.

And fossil fuels are in almost every product consumers use today, with petroleum appearing in everything from cosmetics and personal care products, to everyday items such as smartphones, computers, TVs, shoes, sporting goods, flooring, furniture, and medical supplies.

Grand View Research estimates the global petrochemicals market size was valued at $556.1 billion in 2021 will grow at a 6.2% compound annual rate through 2030, driven primarily by construction, pharmaceuticals, and automotive needs, as well as our industrial economy.

And though petroleum itself is not as important of a component for plastics manufacturing, natural gas and natural gas processing is. 

Still a gusher of an opportunity

The chances that alternative energy replaces fossil fuels for the foreseeable future are incredibly low. That's why I think the energy sector generally, and oil stocks in particular, are great buys, even today at their elevated levels.

Fossil fuels will be around for a long, long time meaning investors are to look very closely at some of the best energy stocks in the space as a long-term growth investment.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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There are about 724 billionaires in the U.S., according to Forbes, and more than 2,700 globally. They come from various backgrounds and made their fortunes in various ways. But when you look at their attitudes and behaviors as a whole, there are some traits many of them have in common.

While few of us will ever become billionaires, it may be helpful to know what some of those common traits are to prepare for our own journey to success and financial independence. Here are three key things that billionaires do that many of us don't, in the words of the billionaires themselves.

1. They're frugal

"Do not save what is left after spending, but spend what is left after saving," Berkshire Hathaway Chairman and Chief Executive Officer Warren Buffett once said. This quote encapsulates a mindset that helped Buffett become one of the world's richest men. You've heard the stories -- Buffett eats at McDonald's, lives in the same house he bought in Omaha in 1958 for $31,500, buys used cars, and used a cheap flip phone until a couple of years ago.

But these are habits that allowed him to save more and invest more, which drove his wealth. He's not alone among frugal billionaires. Microsoft co-founder Bill Gates, who admitted a few years ago to wearing a $10 watch, said his frugal habits were ingrained in him as a young man. "My 20-year-old self is so disgusted with my current self. You know, I was sure I would never fly anything but coach and you know, now I have a plane," Gates said a couple of years ago, reflecting upon the frugality that made him what he is today.

And Jeff Bezos, founder, former CEO, and executive chair at Amazon, said frugality, for him, was the mother of innovation. "I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out."

2. They think big

"Life can be so much broader, once you discover one simple fact, and that is that everything around you that you call 'life' was made up by people who were no smarter than you. And you can change it, you can influence it, you can build your own things that other people can use. Once you learn that, you'll never be the same again," said the late Steve Jobs, founder of Apple.

Jobs lived this, changing the world with his innovations at Apple. Now, this doesn't mean we have to go out and invent the next world-changing technology, but experts say that most billionaires think big and aren't deterred in their endeavors by perceived constraints, whether that's their education level or something else. Obviously, a lot of hard work and strategic thinking goes into being successful in any venture, but it all starts with having that positive mindset and thinking big, as Jobs described.

Or, as Henry Ford, founder of automaker Ford once said, "If you think you can do a thing or think you can't do a thing, you're right."

3. They're not afraid to fail

"My dad encouraged us to fail. Growing up, he would ask us what we failed at that week. If we didn't have something, he would be disappointed. It changed my mindset at an early age that failure is not the outcome, failure is not trying. Don't be afraid to fail," said Sara Blakely, founder of hosiery and women's underwear brand Spanx, who, in 2012, became the world's youngest, self-made female billionaire.

This philosophy, ingrained in her at a young age, constantly pushed her out of her comfort zone to take on new challenges and risks. Many people avoid actions or activities for fear of failure, but Blakely said that not being afraid to "fail" allowed her the freedom to constantly try new things until she hit on that billion-dollar idea. It helped her avoid the true failure of not trying.

One thing you have in common with billionaires

These are just a few common traits but, certainly, much more goes into becoming wealthy and successful. But it's really not about becoming a billionaire -- it's about being successful in however you define success. Many billionaires say they weren't motivated by money, but rather it was an outgrowth of their passion and purpose.

As for the one thing we all have in common, Richard Branson, founder of Virgin Galactic, among other ventures, said it best: "One thing is certain in business, you and everyone around you will make mistakes." But it is from those mistakes, whether it is in business or investing, that you learn, adapt, and create new opportunities for success.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Seemingly every month, a legacy automaker makes an announcement outlining bold plans to decarbonize its operations by investing in electric vehicles (EVs).

Simultaneously, we've seen plenty of new players enter the space, including Chinese automakers like Nio (NYSE: NIO) and U.S. players like Lucid Group (NASDAQ: LCID) and Rivian Automotive (NASDAQ: RIVN). A few years ago, Tesla (NASDAQ: TSLA) seemed like the only true EV investment opportunity. Today, the industry feels more crowded and competitive than ever before.

If you're wondering how to navigate the noise with sound investment ideas, you've come to the right place. Here's the latest on Lucid and Rivian, what makes Tesla unique, and some other investment ideas worth considering now.

Well-deserved praise

Lucid and Rivian have plenty in common. They both have a lot of cash, impressive technology, ambitious plans to disrupt the industry, and are very expensive stocks.

Lucid's competitive advantage is its battery technology, which has allowed it to achieve a longer range and faster charging from a compact configuration. Its battery efficiency of more than 4.5 miles per kilowatt hour is higher than the 4 miles/kWh of Tesla's Model S and other luxury sedans. Lucid stock was the best performing among automakers in 2021 mainly because it delivered on its major promises.

Lucid's initial range and horsepower projections for its Air Dream Edition were met with skepticism. But then the Environmental Protection Agency (EPA) rated the long-range version of the Air Dream Edition with a better-than-expected 520 miles of range and 933 horsepower, and the performance version of the Air Dream with an estimated range of 471 miles and 1,111 horsepower.

This stamp of approval was just one factor of many that made the industry take Lucid seriously. It has expanded its manufacturing capacity, has over 17,000 reservations for its Air line, and plans to expand capacity even further while rolling out lower-priced Air versions in 2022.

Like Lucid, Rivian has a large existing manufacturing capacity, plans to expand in the years ahead, and has strong demand for its vehicles. The company is looking to disrupt the electric van, truck, and SUV market. Although it began deliveries in the third quarter, the results came in lower than Rivian had guided for. However, a bright spot was that pre-orders for its R1T truck now stand at over 71,000, and that's on top of R1S reservations and the 100,000 delivery vans Amazon pre-ordered.

Rivian was awarded the Motor Trend 2022 Truck of the Year award and Lucid received the Motor Trend 2022 Car of the Year award. Investing in either company is a bet that their technology will hold up as new players enter the space, that they will grow production over time, and one day achieve consistent positive operating cash flow and profitably. It's a tall order, which is why both companies are some of the highest-risk options in the industry.

A dynasty far from decline

Despite the potential of companies like Lucid and Rivian, the idea that either is the "next Tesla" is doubtful. Tesla is the industry leader and is probably going to remain the most valuable automaker for decades to come.

Its invaluable first-mover advantage, incredible technology, and years making mistakes (and learning from them) have made it a battle-hardened veteran with one of the highest operating margins in the industry. Put another way, Tesla may not produce the most cars, but it does convert more revenue into actual profit than its competitors.

Its renewable energy and energy-storage segments are growing and also very profitable. In sum, betting against Tesla is a bad idea, especially if the company continues to retain its high profitability even as it grows revenue at a breakneck pace.

Less limelight, but lots of potential

The EV industry is so much more than new automakers or Tesla becoming even bigger. Lucid and Rivian will also have to compete against a crowd of legacy automakers backed by much larger workforces and capital. Make no mistake, these companies are not just going to sit idly by and watch newcomers gobble up market share that took them decades to build.

The legacy automaker that has arguably done the best job fostering real change is Ford (NYSE: F). It may surprise you to learn that Ford stock more than doubled in 2021, making it the second-best performing automaker behind Lucid for the year. Its new management team is keen on investing heavily into EVs to dominate the electric truck industry and compete in electric SUVs -- and it'll soon be making its own batteries and producing vehicles at its new mega factories in Tennessee and Kentucky.

Another way to invest in the EV industry is through infrastructure companies like ChargePoint (NYSE: CHPT), the largest Level 2 (240 volt) charging network in North America. It's quickly growing its Level 3 DC fast-charging network, and continues to look for ways to monetize its subscription business. Although ChargePoint's growth and path to profitability are attractive, some investors may prefer to go with a basket of EV charging stocks.

Zoom out and focus on the big picture

Real gains aren't made when a company beats a single quarter's estimates. Rather, they are made over the long term as new companies evolve into paradigm-shifting growth stories that go on to define an industry. That's exactly what Tesla did to the auto industry. And while there may never be another company quite like it, the auto industry has a very good chance of looking much different a decade from now than it does today.

An investor's task is to determine which companies have the best chance of succeeding and avoid those that aren't making the necessary capital commitments to prepare their businesses for the future.

It isn't hard to envision an EV stock like Lucid taking market share from today's leading luxury sedan makers. Or Rivian taking a chunk out of Jeep's business. Or Ford emerging from the shift from the internal combustion engine (ICE) to the electric motor with a tighter grasp on the global truck market. Or ChargePoint expanding its footprint across North America and Europe.

No matter how good a company's prospects look, the reality is that no one knows exactly which of them will emerge victorious, how long it will take for EVs to surpass ICE vehicles, or if other transportation fuels like compressed natural gas and hydrogen will also take large shares out of the commercial and passenger vehicle markets. Therefore, the best choice for most investors is probably to compile a basket of EV stocks. That way, diversification reduces risk without compromising the chance for upside if a single company proves to be a long-term winner.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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It's fair to say there's been a lot of speculation in share markets since the March 2020 COVID-19 crash.

Of course, the stock market's spectacular recovery out of that trough has made decent money for many people — including first-time investors. 

But nothing probably represents that speculative fervour better than the enthusiasm for a particular US company.

Saxo Markets this week revealed that the 4th-most traded stock among Australians last month was Rivian Automotive Inc (NASDAQ: RIVN).

The electric truck maker made its debut on the NASDAQ on 12 November, Australian time, and quickly captured the imagination of investors.

The stock was listed at US$78 per share but within a week, it hit a high of US$179.47.

And it seems Australians were definitely part of the craziness.

The trouble is, Rivian has so far only made a handful of cars, mostly driven by employees and a select few outside the business. The company has not recorded any revenue yet.

Even at the current stock price of around US$90, the market capitalisation is US$76 billion. That's pretty much the same as Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM), which rake in annual revenues in the hundreds of billions.

What is going on?

Why investors are going mad for Rivian

Australians are going nuts for Rivian because they want to experience the same windfall that Tesla Inc (NASDAQ: TSLA) shareholders have.

Those lucky souls have seen their money multiply 10 times over the past 2 years as the world awoke to the realisation that electric vehicles would eventually dominate.

And who wouldn't want to emulate that?

"Traders are excited to back the next reportedly big electric vehicles startup, with Rivian Automotive Inc seemingly being that meteor to grab onto," stated Saxo in its Australia's 10 Most Popular Stocks in November report.

Rivian supporters point out that e-commerce giant Amazon.com Inc (NASDAQ: AMZN) owns a reported 20% of the business and has an order for 100,000 delivery vans to be fulfilled by 2030.

Why investors should be wary of Rivian

But the trouble is, backing a zero-revenue business — let alone one that's not making a profit — carries a big risk.

The Saxo report pointed out that even if Rivian reached its estimated revenue of US$9.4 billion, the money left over after expenses would not amount to much.

"Based on Rivian reaching Tesla's operating margin of 9.6% and a 25% cash tax rate, this would equate to a net operating income of US$677 million after taxes."

For Saxo Bank head of equity strategy Peter Garnry, the possible financials just do not justify the current valuation.

"Assuming the cost of capital of 10% — primarily equity financed with a high beta and early-start risk premium — and we play with the thought that this revenue/orders were a perpetuity and it could pass on inflation of 3% in the future, then this cash flow is worth [a market cap of] US$10 billion today."

The Motley Fool US' Jason Hall, in a video recorded just before Rivian's listing, could not quite reconcile the numbers either.

"I just can't wrap my head around buying what's essentially still a start-up," he said.

"This is still a start-up, they're still basically pre-revenue. Start manufacturing 100,000 cars a quarter, and then we can have a conversation about whether I think it's an investable company."

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US markets tumbled on Wednesday, putting the spotlight on S&P/ASX 200 Index (ASX: XJO) tech shares for Thursday's session. As most of Australia slept, the Nasdaq Composite fell 1.66% while the S&P 500 Index dropped 0.82%.

The slip followed the release of data that showed US inflation hit a 30-year high in October.

Over the 12 months ended October, the US's consumer price index increased 6.3%. The index measures how prices for goods and services change month-to-month.

According to reporting by the Wall Street Journal, the initial impact of the data saw the price of stocks drop and that of bonds bolster.

Which stocks dragged on the US market overnight?

Nasdaq

The biggest weights on the Nasdaq Composite include the Moderna Inc (NASDAQ: MRNA) share price, which fell 3.33%.

That of Amazon.com, Inc. (NASDAQ: AMZN) also dropped 2.63% while the newly re-branded Meta Platforms Inc (NASDAQ: FB) share price dipped 2.3%.

Interestingly, the Tesla Inc (NASDAQ: TLSA) share price slightly recovered from its earlier 16% plunge. It gained 4.34% on Wednesday.

S&P 500

Weighing on the S&P 500 were the share prices of Ford Motor Company (NYSE: F), Nike Inc (NYSE: NKE), and Twitter Inc (NYSE: TWTR).

They fell 3.7%, 3.1%, and 2.5% respectively.

ASX 200 tech shares in focus

The dip in US markets might make for an interesting day on the ASX. Particularly, since ASX 200 tech shares tend to trend in line with their Nasdaq-listed peers.

One of the obvious share prices to keep an eye on is that of Afterpay Ltd (ASX: APT). The buy now, pay later company's suitor, Square Inc (NYSE: SQ) saw its share price drop 1.55% overnight.

Both the Xero Limited (ASX: XRO) and Nuix Ltd (ASX: NXL) share prices could also be in for a big session on Thursday.

The 2 ASX 200 tech shares have already struggled this week. They've both fallen 4% since Friday's close.

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The market wrap-up

Data source: Yahoo! Finance.

Another strong year in 2021?

Which stocks are leading the way?

• A growing awareness that legacy automaker stocks should be able to participate and thrive in the trend toward electric vehicles. Shares of Ford Motor (NYSE: F) are up nearly 70% year to date, while General Motors (NYSE: GM) is crushing the market with gains of more than 40%.
• Energy stocks have continued to rebound. Marathon Oil (NYSE: MRO) has led the way with a near doubling in its stock price so far in 2021, but many other exploration and production companies are faring nearly as well.
• Hard-hit retailers are demonstrating their ability to bounce back as the economy reopens. L Brands (NYSE: LB) has seen gains of more than 90% so far in 2021, and Gap (NYSE: GPS) isn't too far behind with its 60% rise.
• Even tech giants are playing their part in driving gains. NVIDIA (NASDAQ: NVDA) has risen more than 50% on hopes that its stock split signals even better times ahead, while Applied Materials (NASDAQ: AMAT) and its almost 65% rise is symptomatic of the strength throughout much of the semiconductor space.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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That's where the US markets can come in handy. Not only is America home to some of the best companies in the world such as Apple Inc (NASDAQ: AAPL). it also offers ASX investors some exposure to trends and sectors that the ASX 200 just can't.

So here are 3 ASX exchange-traded funds (ETFs) that have the potential to easily expose any ASX investor's portfolio to the US markets.

3 ASX ETFs that can offer ASX investors easy US markets exposure

iShares S&P 500 ETF (ASX: IVV)

Here we have a simple, cheap US-based index fund. The S&P 500 Index (INDEXSP: .INX) is one of the largest and most-tracked index in the world. It holds 500 of the largest companies in the US. That's everything from Apple and Microsoft Corporation (NASDAQ: MSFT) to Ford Motor Company (NYSE: F) and Adobe Inc (NASDAQ: ADBE). This is the index that IVV tracks. This ETF has been an objectively solid performer over the past 10 years, returning an average of 17.93% per annum. it also has one of the lowest management fees of any ETF on the ASX at 0.04% per annum.

BetaShares Nasdaq 100 ETF (ASX: NDQ)

Another US-based index fund here. But instead of the S&P 500, NDQ tracks the Nasdaq-100 (INDEXNASDAQ: NDX). This index is a little different, holding only the companies that list on the Nasdaq exchange. The Nasdaq is one of the major stock exchanges in the US, but it's a lot newer than its main rival the New York Stock Exchange. As such, it tends to house mostly tech companies. It's largest holdings are Apple, Microsoft, and other tech giants like Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), Facebook Inc (NASDAQ: FB) and Netflix Inc (NASDAQ: NFLX).

NDQ charges a management fee of 0.48% per annum, and has retuned an average of 20.94% per annum since its inception in 2015.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

This ETF is a little different from the above examples as it is not an index fund. Rather, it can be described as an 'active ETF'. That's because it invests in companies that meet certain criteria – that of a wide economic moat. VanEck works with Morningstar to identify a concentrated portfolio of at least 40 US shares that show signs of a 'wide moat'.

'Moat' is a Warren Buffett term that describes a company's intrinsic competitive advantage. This can be in a powerful brand, cost advantage or other factors that enable a company to stay on top of its competition. Some of MOAT's top holdings include Pfizer Inc. (NYSE: PFE), Boeing Co (NYSE: BA) and Buffett's own Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B). MOAT charges a management fee of 0.49% per annum. It has returned an average of 20.38% per annum since its inception in 2015.

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You have your classic index funds, such as the Vanguard Australian Shares Index ETF (ASX: VAS). There are also your ETFs that follow more specific, or thematic investments, such as the BetaShares Global Cybersecurity ETF (ASX: HACK).

The iShares S&P 500 ETF (ASX: IVV) falls into the former group. But instead of tracking ASX shares, it follows the US S&P 500 Index (INDEXSP: .INX), which follows 500 of the largest public companies over in the United States. If you can think of an American company, be that Apple Inc (NASDAQ: AAPL), Netflix Inc (NASDAQ: NFLX) or Nike Inc (NYSE: NKE), it's probably in this index, and ETF.

We take a closer look at why this ETF could be a buy today.

Low management fee

This ETF charges a management fee of 0.04% per annum – one of the lowest on the entire ASX. That fee represents an annual cost of $4 for every $10,000 invested. Fees that ETFs and managed funds charge can take a serious chunk out of your long-term returns. As such, it's usually a good idea to try and minimise these. For example, there will be a big difference in your net wealth if you choose a fund with a management fee of 0.1% than one with 1% if both funds generate an equal gross return.

Diversification

Because this ETF invests in 500 companies, it can provide some meaningful diversification to an ASX share portfolio, especially one holding mostly ASX blue-chip shares. Not only that, many of the companies that the S&P 500 holds are truly global businesses like Apple, Netflix, Nike or Ford Motor Company (NYSE: F). As such, there is far less exposure to just the US economy than you might think. This can be a very useful way of juicing up a portfolio's diversity.

Performance

Past performance is, of course, no future indicator of future returns. However, this ETF has been a very lucrative investment to own over the past few years. In fact, investors have enjoyed an average return of 15.38% per annum over the past 5 years, and 17.93% over the past 10. Those returns dominate what any ASX index fund has returned over that period, and indeed what many actively-managed funds have returned.

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The Tesla Inc (NASDAQ: TSLA) share price fell slightly last night after news of its latest upgrade. Your next gaming party might be hosted from the seat of an electric vehicle. It sounds a little crazy, but Tesla and semiconductor maker Advanced Micro Devices Inc (NASDAQ: AMD) want to make high-end gaming possible on the road (when safely parked hopefully).

Speaking at the information technology expo Computex, AMD CEO Lisa Su revealed how it's making it all possible.

What's under the hood?

Yesterday, Lisa Su revealed that the new Tesla Model S and X will be powered by some serious AMD grunt. Tesla's infotainment system will be driven by an AMD Ryzen processor and AMD RDNA 2 graphics processing unit.

Reportedly, this will offer up to 10 teraflops of processing power. In simple terms, enough computational juice to play AAA titles.

Explaining the details during the keynote, Su said:

So, we actually have an embedded AMD Ryzen APU powering the infotainment system in both cars. As well as a discrete RDNA 2-based GPU that kicks in when running AAA games – providing up to 10 teraflops of compute power.

Given the recent cryptocurrency hysteria, some are wondering whether the graphics processor will make mining a possibility with a Tesla. At this stage, nothing has been stated to suggest it is possible.

Tesla share price on the news

The future potential of playing high-end gaming titles in a Tesla didn't seem to rally much enthusiasm overnight. The Tesla share price dipped 0.2% lower to US$623.90 and slipped further in after-hours trade.

Market participants might be happier spectating for now after Ford Motor (NYSE: F) unveiled its battery-electric pickup truck. The Ford F-150 lightning forms part of the automaker's $30 billion electric vehicles (EVs) plan for the next 4 years. However, no signs of a fully-fledged gaming system in the F-150 were shown.

While the Ford share price has made a resurgence over the last year, its market capitalisation remains unable to rival Tesla. The legacy automaker has rallied to a US$58 billion valuation. Meanwhile, Tesla's valuation is more than ten times greater, at US$628 billion.

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ASX lithium shares made another run between late March and early May into multi-year highs. But early May soon became the tipping point for many lithium shares, with heavyweights Pilbara Minerals Ltd (ASX: PLS), Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE) all falling roughly 20%.

However, ASX lithium shares are on the move again today, with the Pilbara share price up 6.60% to $1.21, the Galaxy Resources share price up by 6.44% to $3.80 and the Orocobre share price up 5.28% to $6.58 (at time of writing).

Elsewhere, US-based Piedmont Lithium Ltd (ASX: PLL) has edged 0.87% higher to 81 cents, soon-to-be producer Core Lithium Ltd (ASX: CXO) has dipped 2.08% to 24 cents and Vulcan Energy Resources Ltd (ASX: VUL) shares are running hot again, up 4.90% to $7.50 after announcing another key project milestone.

A winding road for ASX lithium shares

The run from multi-year lows to multi-year highs for ASX lithium shares has been filled with healthy pullbacks.

Take the Galaxy share price, for example. Its shares have run from lows of around 70 cents in May 2020 to highs above $4 in May 2021. During this time, its shares have experienced 4 pullbacks greater than 20%. These pullbacks occurred during June and September last year, and January/February and May this year. Since then, Galaxy shares have been trending strongly.

Commodity prices continue to edge higher

The resurgence and hype behind ASX lithium shares hasn't just come out of thin air. Both explorers and producers have been supported by a sharp increase in lithium spot prices.

Fastmarkets provides regular lithium price updates across major regions including China, Europe and the US. Its more recent update observes higher lithium hydroxide prices in China on "tight supply and robust buying appetite" and higher prices across Europe and US.

Lithium in demand on all fronts

The tailwinds for ASX lithium shares continue to come from both countries and companies alike.

In Vulcan's project milestone announcement this morning, its managing director Dr Francis Wedin noted:

With the International Energy Agency last week declaring the need for annual battery production of 6,600 GWh by 2030, implying an annual lithium chemicals requirement of 22 times current total global production, Vulcan is leading the charge to reduce large carbon emissions currently embodied in the traditional production of lithium.

Elsewhere, ASX lithium shares could benefit from US President Joe Biden's US$2.3 trillion infrastructure project with a focus on renewable energy. According to Mining.com.au, the program includes US$174 billion to promote electric vehicles, which could see Australia and other countries becoming the US' battery metal suppliers.

On Wednesday, the Ford Motor Company (NYSE: F) share price jumped 8.55% after the company announced the acceleration of its electric vehicle efforts. The company expects approximately 40% of its sales to be electric vehicles by 2030 and plans to lift electric vehicle investment to more than US$30 billion by 2025.

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The stock market was generally strong on Wednesday, with a decided preference for more aggressive small companies over their larger counterparts. That was plainly obvious in how the Dow Jones Industrial Average (DJINDICES: ^DJI) and S&P 500 (SNPINDEX: ^GSPC) settled for small moves, while small-cap benchmarks were up nearly 2% on the day. The Nasdaq Composite (NASDAQINDEX: ^IXIC) saw the largest benefit from the trends favoring smaller stocks.

Data source: Yahoo! Finance.

The electric vehicle (EV) industry is turning out to be a battleground between well-established automakers with long histories of innovation and newer entrants with an eye toward disrupting the auto industry. Interestingly, shares of both Ford Motor (NYSE: F) and Tesla (NASDAQ: TSLA) were higher on Wednesday. Despite the two companies being apparent rivals in the EV space, some investors are starting to think that there might be a place for both auto giants in the shift away from vehicles that burn fossil fuels. Below, we'll look more closely at both Ford and Tesla.

Ford has a plan for EVs

Shares of Ford Motor vaulted higher by nearly 9% on Wednesday. The Michigan-based giant revealed more of its strategy to take advantage of the electric vehicle shift, and investors generally liked what they saw from Ford.

The new Ford+ strategy will involve a massive financial commitment from the automaker. Ford expects to spend more than $30 billion on EV-related development and technology within the next four years, which is $8 billion more than it had previously committed to investing. The automaker has set an ambitious goal of having 40% of its global-vehicle volume consist of all-electric vehicles by 2030, driven by electrifying key brands like the F-150 Lightning and the Mustang Mach-E.

Yet Ford+ goes beyond EV. Ford will also establish its Ford Pro commercial vehicle services and distribution business, with an emphasis on corporate and government customers. Fleets will incorporate both electric and internal combustion vehicles but bundled with key services of greatest value to commercial users.

In addition, Ford anticipates providing a far greater array of connected services, including over-the-air system updates, digital tools and technology developed both in-house and from third-party providers, and advances in driver-assistance technology. Ford even called out Tesla by name in its press release, hoping to serve a wider audience than its rival within the next several years.

Tesla gets a rebound

Some investors might have feared that what's good for Ford would be bad for Tesla, but that wasn't the case. Tesla shares picked up more than 2% on Wednesday.

The move higher came even as Tesla made a move that would actually detract from its driver-assist functionality. The automaker said that it would no longer provide radar equipment as part of its Autopilot system for Model 3 and Model Y vehicles built for the North American market. Instead, these vehicles will rely solely on camera vision and neural net processing.

Tesla's approach is interesting, given the rest of the industry's increasing reliance on radar and lidar systems. Nevertheless, CEO Elon Musk has long been skeptical of the need to go beyond visual information, hoping that the Tesla Vision platform will be able to scale up quickly.

Plenty of room for everyone

Although the narrative for many in the auto industry has been one of Tesla displacing legacy automakers like Ford and eventually rendering them obsolete, the reality is more likely to reflect the various advantages and consumer preferences of each brand. There's more than enough room in this growth market for both Ford and Tesla to thrive, and it'll be interesting to watch how they and others jockey for position in this innovative, fast-growing market.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

Ford Motor Company (NYSE: F) stock enjoyed a modest tailwind Thursday, closing the day up 3.1% after announcing that its new electric F-150 Lightning pickup truck will go on sale next year for the low, low price of $39,974. That's just $74 more than Tesla (NASDAQ: TSLA) says it will sell its Cybertruck for, and with Ford beginning sales in 2022 -- but Tesla not saying when its Cybertruck will arrive -- Ford's F-150 Lightning might even beat Cybertruck to market. 

And yet, while it was Ford that made the headlines, it was Tesla stock that went up more today: 4.1%.

So what

So how did Tesla steal Ford's thunder? (I mean, its Lightning?)

I've got a couple of theories. The most likely is that investors are viewing Ford's electric F-150 bet as validating Tesla's idea of selling electric pickup trucks, and as a sort of backhanded endorsement that Tesla was right all along about the future of cars -- and trucks -- being electric.

A second factor possibly helping out Tesla investors is that famed tech investor Cathie Wood snapped up another 69,508 shares of Tesla today for three of her ARK investment funds. Combined with the more than 47,000 shares Wood purchased the day before, that makes for about 116,500 Tesla shares she's added to her holdings this week -- the first such buying she's engaged in since April.  

Now what

After a month of nearly continuous selling of Tesla stock on the market, driving shares of Elon Musk's car company down nearly 25%, investors may be taking Wood's buying as a "green light" signal that it's safe to get back in the water again.

And not even a press release from Ford could stop this rally.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Ford couldn't keep Tesla shares from popping today appeared first on The Motley Fool Australia.

The Integrated Research Limited (ASX: IRI) share price had a superb day today. Integrated Research shares closed the day up 7.66% to $2.39 a share after closing at $2.21 last Friday and opening at $2.30 this morning. The shares were as high as $2.43 during intra-day trading as well, a rise of more than 9% at the time.

However, zooming out and it becomes clear that today's moves are just some sugar on what has been a very unpleasant sandwich investors have had to endure over the past year. Even after today's gains, Integrated Research shares are still down more than 50% from the company's 52-week high of $4.92 that we saw back in August last year. They are also at a similar level to what you could have purchased them for back in 2015.

So who is this company? And why are Integrated Research shares doing so well today?

A well-integrated company?

Integrated Research is a company that trades in IT solutions. It writes and sells software platforms that assist business clients in simplifying and optimising their digital operations and data. It does so through three product offerings: IR Collaborate, IR Infrastructure and IR Transact. All three of these products are available through Integrated Research's Prognosis platform.

The company can boast some A-list clients, including Commonwealth Bank of Australia's (ASX: CBA) BankWest, the US telco Verizon Communications Inc (NYSE: VZ), Ford Motor Company (NYSE: F) and the US pharmacy chain Walgreens of Walgreens Boots Alliance Inc (NASDAQ: WBA).

Software-as-a-Service (SaaS) companies have been very popular with ASX investors in recent years. But, as we touched on earlier, things haven't been going Integrated Research's way over the past year or two. the company was hard hit by the coronavirus pandemic last year. Business closures and purchasing deferrals have resulted in revenue and profit writedowns for the company. A sharply rising Aussie dollar over the past year or so also hasn't helped.

In fact, it was only last month that Integrated Research gave us a half-year earnings update for the six months to 31 December 2020. In this update, Integrated Research told investors that revenues were down 56% on the prior corresponding period. While net profits after tax had collapsed 99% to $129,000.

Why are Integrated Research shares up today then?

At first glance, it's not entirely obvious why Integrated Research shares are rising so enthusiastically. The last piece of official news out of the company came back on 22 March. That was a notice that Integrated Research's chair Paul Brandling had resigned from the company effective 20 March. He has been replaced as chair by Peter Lloyd.

The only clue we have to today's massive share price movement is trading data from the ASX. ASX data shows that trading volume today is, at the time of writing, sitting at 448,000 shares. That's well above the company's 5-day average of ~190,000 shares, and well exceeding Friday's number of 142,000 shares. This could be indicating that a large fund manager or other institutional investor has been initiating a large positioning in the company.

Whatever the cause, it has been an indisputably good day for Integrated Research shareholders. On the current share price, the company has a market capitalisation of $408.15 million.

The post ASX stock of the day: Integrated Research (ASX:IRI) shares up 7% appeared first on The Motley Fool Australia.

Ford Motor Company (NYSE: F) announced Monday that it has entered a six-year deal with Google, which will make the search giant responsible for much of Ford's upcoming in-vehicle connectivity.  

Under the deal, future Ford and Lincoln vehicles — beginning in 2023 — will be "powered" by Google's Android operating system, providing customers with built-in access to Google services such as Maps, Play, and Assistant. 

In addition, the in-car systems will be able to run apps from both Ford and third-party developers, the companies said. 

Ford and Google are establishing a new collaborative group, called "Team Upshift," to "push the boundaries of Ford's transformation" by exploring and developing new products and services that make use of the data that will be gathered, the company said in a statement.

Ford said that the partnership is intended to streamline its operations and accelerate its ongoing $11 billion restructuring plan. CEO Jim Farley said that Ford will be able to redirect spending from developing its own navigation and in-car entertainment systems in-house, which he said gave Ford's customers a "generic" experience. 

For Google and its parent Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), the deal gives Google Cloud a prominent new customer that could help it win additional business. Google Cloud's market share has lagged similar offerings from rival tech giants Amazon Inc (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT). 

Financial terms of the deal were not disclosed. 

Microsoft signed a similar deal with General Motors Company (NYSE: GM) and its Cruise self-driving subsidiary in January. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Investing in the United States and its markets has become increasingly popular in recent years. It's easy to understand why. As technology and globalisation become ever more prevalent, we can't help noticing brands like Apple Inc (NASDAQ: AAPL) and Alphabet Inc's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google pop up in the everyday household. Or cars made by Tesla Inc (NASDAQ: TSLA) or even Ford Motor Company (NYSE: F) appear on our roads, perhaps driven by an Uber Technologies Inc (NYSE: UBER) driver. Or apps that Netflix Inc (NASDAQ: NFLX), Walt Disney Co (NYSE: DIS), or Amazon.com Inc (NASDAQ: AMZN) supply on our TVs.

If you dig a little deeper in your own cupboard, you might find Kellogg Company (NYSE: K) cereal or razors made by Procter & Gamble Co's (NYSE: PG) Gillette.

American companies are everywhere in Australian life, often hiding under familiar brands. Take the popular ice creams Paddle Pop and Golden Gaytime. They are actually owned by the British-Dutch company Unilever UN (NYSE: UL), listed in the US.

So it's understandable that Aussie investors might want a slice of the pie. And they do. You can take a look at our coverage of some of the most popular US shares that Aussie are buying.

Recently, we covered how the rising Australian dollar was making investing in US shares more attractive. So if you've never taken the plunge across the Pacific, it might be a good time to have a think about it. There's nothing wrong with our own S&P/ASX 200 Index (ASX: XJO) of course. But the reality is that our market is a minnow in the ocean of global markets. The US markets are, by comparison, a pod of whales. I say a pod because the US has a few different markets you can invest in. Rather than just one major index, like our ASX 200, American investors have a few choices. There's the old-school Dow Jones Industrial Average (INDEXDJX: .DJI), the uber-popular S&P 500 Index (INDEXSP: .INX), and the tech-heavy NASDAQ-100 (INDEXNASDAQ: NDX).

Buying US shares on the ASX

You can always buy US shares directly through your ordinary broker. Many of the most popular Aussie share brokers, like Commonwealth Bank of Australia's (ASX: CBA) CommSec, or National Australia Bank Ltd's (ASX: NAB) NABtrade offer the opportunity to buy US shares like Apple or Netflix directly. There are also newer dedicated US brokers, like the popular Stake, which do the same.

However, if you don't want to buy these shares directly, there are other options. Various managed funds and Listed Investment Companies (LICs) that are listed on the ASX invest in US shares. Some popular examples include the Magellan Global Fund (ASX: MGF) and MFF Captial Investments Ltd (ASX: MFF).

Otherwise, there are always US market-tracking index funds available on the ASX as well. Some examples include the iShares S&P 500 ETF (ASX: IVV), the Vanguard US Total Market Shares Index ETF (ASX: VTS), and the BetaShares Nasdaq 100 ETF (ASX: NDQ). There's also a couple of currency-hedged options for the investor who wants to take currency fluctuations out of the equation. These include the iShares S&P 500 AUD Hedged ETF (ASX: IHVV) and the BetaShares NASDAQ 100 ETF – Currency Hedged (ASX: HNDQ).

Foolish takeaway

For the investor who wants to branch out and invest in US shares, there are more options available than ever. In the end, it just depends on your individual preferences as to which route you wish to take.

The post How to invest in US shares in 2021 appeared first on The Motley Fool Australia.

One of the market's hottest stocks this year is Tesla Motors (NASDAQ: TSLA). The maker of next-gen electric cars is trading 73% higher in 2020. Larger U.S. automakers are driving in reverse. Ford (NYSE: F) and General Motors (NYSE: GM) have plummeted 47% and 39%, respectively, this year.

Tesla bulls will argue that the divergence makes sense because most of them don't see the market darling as an automotive stock. Tesla Motors is a tech stock, the argument goes, more like Apple (NASDAQ: AAPL) – the iOS giant that reportedly once tried to acquire it – than Ford or GM. Let's size up the arguments for Tesla as a tech stock.

Shifting into a new gear

There are some ways that Tesla is a tech stock, and perhaps even a lot like Apple itself. However, the obvious reason bulls don't want to lump Tesla into the category of automakers is that it's valuation is out of whack in that arena.

Tesla's enterprise value of $143 billion -- and it's important to use enterprise value instead of market cap given the highly leveraged ways of older car manufacturers -- is roughly between General Motors at $120 billion and Ford at $154 billion. The problem is that Ford and GM are generating roughly six times the trailing revenue of Tesla. 

The bullish justification has historically been that Tesla deserves a huge premium given its heady growth, but that hasn't been the case lately. Revenue declined in the third quarter of last year, recovering only slightly with a 2% increase in its latest quarter. Tesla is moving more cars, but the sales mix is moving to the cheaper Model 3 (and now the Model Y) at the expense of the pricier S and X models. 

Tesla has rolled out cheaper cars to reach a broader market, and the same can be said about Apple with its entry-level gadgetry. A big difference is how each one stacks up when it comes to margins. Tesla's gross margin has decelerated for three consecutive years, clocking in at 16.6% last year. Ford and General Motors are lower at 8.3% and 10.3%, respectively, but it's no match for Apple at 37.9%. It should also be said that Apple's gross margin clocks in lower than other software-heavy tech giants. 

Apple and Tesla both sell hardware, but Apple keeps nibbling away at you with opportunities to generate high-margin services revenue. Where is Tesla's app store? Where is its iCloud? Tesla cars aren't cheap, but a big selling point is that the cars cost a lot less to maintain. In short, the showrooms are making less after the sale than other car companies.

It's OK to be bullish on Tesla the company, and the stock's always going to be a tricky stock for naysayers to short. We're seeing shorts getting squeezed again now, even as automakers are reeling. There is a lot of neat tech to Tesla, and it's perpetually raising the bar. In time it may evolve into a tech stock on wheels, especially as it builds out services and subscription platforms. However, just because it's overpriced as an auto stock doesn't mean Tesla can be hoisted up as the next great tech stock or the Apple of its niche. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The rise in Tesla (NASDAQ: TSLA) stock has become the hottest story in the stock market. After having faced real fears of financial strain less than a year ago, the electric vehicle manufacturer has seen its share price double in just the past month.

With a market capitalization topping $160 billion, Tesla has now become larger than U.S. Big 3 automakers General Motors (NYSE: GM) ($50 billion), Ford (NYSE: F) ($36 billion), and Fiat Chrysler (NYSE: FCAU) ($26 billion) combined -- and almost enough room left over to toss on Mercedes-Benz manufacturer Daimler ($50 billion) for good measure. The move has left many wondering exactly how Tesla got here -- and what's ahead for the car company down the road.

Tesla's stock history

All the attention people are paying to Tesla right now concerns its stock price. After going public in 2010 at $17 per share, the stock price rose steadily but slowly until 2013, when it soared to more than $200 per share. That first wave of excitement reflected the early success of the automaker's efforts in producing and selling its early electric vehicles.

2017 brought a new surge higher, taking Tesla shares above the $350 mark. Yet that move higher reversed itself last year, as fears about whether the company was on a sustainable financial path, not to mention CEO Elon Musk's multiple public spats with the SEC, sent the stock back below the $200 mark briefly.

Once those fears subsided, investors got excited about Tesla's prospects again. Yet even in that light, the fourfold rise in Tesla stock over the past six months is remarkable.

The right way to look at Tesla

It's all too easy to get caught up in the ups and downs of Tesla's stock price. What's more important is to look at the company's strategic vision and future prospects. In the end, those fundamental aspects of Tesla's business are the only things that can justify the automaker's valuation.

In that light, what Tesla's done in such a short period of time is indeed extraordinary:

• The production of the Tesla Roadster in 2008 proved that the company could build a vehicle that used electric power without sacrificing performance compared to gas-powered cars. By 2010, the company had delivered 1,500 of the sportscars.
• The introduction of the Model S luxury sedan in 2012 brought Tesla closer to the mainstream vehicle market, with the automaker producing vehicles at a rate of about 20,000 per year.
• CEO Elon Musk's announcement about the Model 3 mass-market electric vehicle in 2016 culminated in another huge ramp-up in volume, with almost 370,000 cars delivered to customers in 2019 -- up 50% in a single year.

Even so, none of that explains why Tesla's stock is more valuable than those of four huge, established automaker giants combined. For that, you have to look to the future.

Sure, much of that future is tied to electric vehicles. The Model Y SUV is likely to come out this year, and the recent announcement of the Cybertruck generated a lot of publicity. Tesla's Semi electric-powered truck platform could expand the automaker's influence into the commercial vehicle realm as well.

But Tesla's early success with electric vehicle manufacturing is just the beginning of a long journey in Musk's eyes. For the Tesla CEO, electric vehicles were always only a portion of a broader vision of a world in which overall energy use was sustainable and mindful of global ecological concerns. Musk believes that autonomous driving isn't just a business opportunity but a way of making car travel far safer than it is today, regardless of what powers a vehicle using it. The things that are happening in its Gigafactories have the potential to go far beyond the auto industry, with applications in the solar energy and battery storage areas that would be valuable to vast swaths of the business world.

Think long-term

Trying to judge Tesla's future based on what it looks like today would be like basing Amazon.com's (NASDAQ: AMZN) prospects back in 1999 on its ability to sell more books online. It doesn't mean that Tesla's stock won't see a huge decline in the future, just as Amazon suffered in the years following the dot-com boom. But in the long run, what's far more important is whether Tesla keeps expanding its automotive operations while also finding new and exciting markets that can benefit from the company's vision. If it can, then even the recent surge in the car stock's  price might well prove justified in time.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Tesla is now bigger than Ford, GM, and Fiat Chrysler combined: How it got here appeared first on The Motley Fool Australia.