FRANKFURT -- Are Tesla shares overvalued? Daimler's leaders apparently believe investors have gotten ahead of themselves in their exuberance for Elon Musk's California-based electric vehicle manufacturer.
Last week, the German automaker dumped its 4 percent stake for $780 million -- not bad considering it paid $50 million for the stake in May 2009. While the cash proceeds will help fund things like dividends, don't expect much of an earnings impact, since Daimler booked most of the capital gains already in the second quarter.
With the sale, Daimler does limit risks to its income statement by unwinding last year's costly financial hedge against a fall in Tesla's stock. The more shares rose, the heavier the losses for Daimler -- $290 million in the first half.
Tesla's stock deflated somewhat after oil prices went into bear market territory, discouraging demand for EVs. And markets overall have declined. Still, Tesla trades at 11.9 times sales vs. just 0.5 times for Daimler, according to Bloomberg data. Its $29 billion market cap is astonishing, given that it expects to deliver only 35,000 cars this year and booked a $110 million first-half net loss.
Also, it's a little worrying that Norway represents a quarter of its global revenue, given the oil-rich nation's oddly generous subsidies for EVs. Upcoming risks include the Model X crossover launch in spring and the $2 billion investment in a factory for batteries needed to mass-produce its planned Model III.
Daimler CEO Dieter Zetsche may have hinted earlier this month at the disposal of Tesla shares. When asked at the Paris auto show whether he might raise the stake in Tesla, he chuckled before explaining that "this would be a very costly endeavor, and I don't foresee that."
Pressed on whether Tesla shares were overvalued, Zetsche said: "The financial market has made its judgment, so who am I to come to a better conclusion?"
Actually, he did the moment he sold.