Skip to main content

GM vs. Tesla stock performance (it's not even close)

General Motors vs. Tesla Motors in charts, from late 2010 to 2014. I'm sharing these charts to highlight the difference between a former industry leader, GM, and the auto industry's current leading growth stock, which is Tesla. 

Let's say you have a choice between a former leader-turned-laggard and an emerging new leader with strong sales and earnings growth. Which investment will you choose? If you select the right stock, you will see a profound increase in your investment returns.

First, let's look at the individual stock charts of post-bailout GM, which emerged from bankruptcy and IPO'd in November 2010, and TSLA which IPO'd in June 2010

GM went public (again) at $33 a share with an IPO day close at $34.19. The stock peaked above $41 in late 2013. Today, GM trades at $34.87, about 2 percent higher than its first day closing price back in late 2010. 




Tesla had a stronger IPO day back in June 2010, surging 41% from its $17 opening price to close at $23.89. 

Initially, newcomer Tesla may not have had the widespread brand name recognition of a General Motors. However, this also worked in Tesla's favor as former US auto industry leader, GM was plagued with the bad reputation of its declining years and a highly unpopular taxpayer-funded bailout. Tesla also faced its share of detractors and doubts over its ability to scale up future car production and achieve profitability.

After nearly 3 years of slowly moving higher, TSLA shares broke out above $40 in April 2013. This marked the beginning of a powerful uptrend, fueled by the popular new Model S and turn to (non-GAAP) profitability, that has taken TSLA well above the $200 mark. TSLA trades at $215 today, down from its recent peak of $265. 



As you'll see from the relative performance chart, since November 19, 2010 (GM's IPO) Tesla has trounced General Motors. GM is up 2% from its first weekly closing price of $34.26, while TSLA (shown in green) is up 593% over the same period, from a $30.99 closing price. 



Tesla, the upstart electric car manufacturer, has outmaneuvered GM, the very company that once famously "killed the electric car".

The current news coverage and mood surrounding the two firms reveals another stark divergence. While Tesla is in its dynamic growth phase, leading the worldwide charge towards electric vehicles and winning over customers with its handling of recent underbody and fire safety issues, GM is issuing a corporate apology to families of drivers who died in cars with faulty ignition switches and disabled airbags. GM's growth phase and leadership position, dating back to the 1920s - 1950s, can scarcely be seen in the proverbial rearview mirror.

The market is currently voting in favor of the auto industry (and power generation) upstart, Tesla. GM is the former industry leader, Tesla the current emerging leader. In the future, you may be faced with a similar leader vs. laggard choice in your trading or investing process. Which stock will you buy?

Disclosure: I have no position in either TSLA or GM at this time. Posts are strictly educational material. No buy or sell recommendations on securities or personalized investment advice are offered to readers of this blog.  

Related posts

1. He shorted Tesla (a rags to riches story).

2. Tesla hits new all time high: do androids dream of electric cars?

Popular posts from this blog

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4.

Slate profiles Victor Niederhoffer

Slate's recent profile of writer/speculator, Vic Niederhoffer has been getting some attention from traders and finance types in recent days. I thought we'd take a look at it here too, to offer up some possible educational value from Vic's experiences with trading and loss. Here's an excerpt from Slate's profile of Victor Niederhoffer : " I've enjoyed getting your e-mails. It sounds like you've thought a lot about being wrong. Well, the reason you contacted me, to call a spade a spade, is that I'm sort of infamous for having made a big, notorious, terrible error not once but twice in my market career. Let's talk about those errors. The first was your investment in the Thai baht, which pretty much wiped you out when the Thai stock market crashed in 1997. I made so many errors there it's pathetic. I made one of my favorite errors: "The mouse with one hole is quickly cornered." That is key. There are certain decisions you make in li

William O'Neil Interview: How to Buy Winning Stocks

Investor's B usiness Daily founder and veteran stock trader, William O'Neil share d his trading methods and insights on buying winning stocks in an in-depth IBD radio interview. Here are some highlights from William O'Neil's interview with IBD: William O'Neil's interest in the stock market began when he started working as a young adult.  "I say many times that I didn't get that much out of college. I didn't have much interest in the stock market until I graduated from college. When I got married, I had to look out into the future and get more serious. The investment world had some appeal and that's when I started studying it. I became a stock broker after I got out of the Air Force."    He moved to Los Angeles and started work in a stock broker's office with twenty other guys. When their phone leads from ads didn't pan out, O'Neil would take the leads and drive down to visit the prospective customers in person.