Exxon’s Market Value Tops Tesla’s as Oil Rises, EV Sales Slow

By Bloomberg

Apr 19, 2024

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An Exxon Mobil gas station in Washington, DC, US, on Tuesday, Nov. 28, 2023. Gasoline prices have fallen for 60 consecutive days, the longest streak of declines in more than a year, letting American drivers pass on savings at the pump to consumer retailers during the US economy's all-important holiday season.

(Bloomberg) -- Exxon Mobil Corp. surpassed Tesla Inc. in market value for the first time in more than a year after the electric vehicle maker’s sales slowed and investors bet on consumers’ reluctance to ditch gas-powered cars.

Tesla is down 41% in a punishing start to the year, marked by renewed growth worries, widespread job cuts and its first year-over-year sales drop since the early days of the pandemic. Meanwhile, Exxon has finally arrested a decade-long production decline with fast-growing oil developments in Guyana and the Permian Basin, maximizing the benefit of crude’s 16% gain this year.

The reversal shows how the path to electrifying road transport has turned out to be more challenging than many thought. Ford Motor Co. and Hertz Global Holdings Inc. are among companies rethinking their big bets on electric vehicles as market penetration slows due to cost and the difficulty of charging in public. Exxon’s ascent, buoyed by record worldwide oil demand, also reflects a fading ESG movement that helped crush Big Oil valuations during the pandemic.

Tesla’s market value peaked at nearly $1 trillion over Exxon’s in November 2021, when the stock was propelled by growing deliveries, expansion into China and the promise of self-driving cars. Investors have since downgraded their expectations on all three.

Tesla fell 1.9% to $147.05 a share on Friday, making it the second-worst performing stock in the S&P 500 Index this year. Exxon increased 1.1% in New York trading. Tesla’s market capitalization at the close was about $469 billion, versus about $475 billion for Exxon.

Even after Tesla’s disastrous first-quarter results, the stock still carries a lofty valuation well in excess of those for oil and gas companies. It trades at about 53 times forward 12-month earnings and isn’t buying back shares or paying a dividend. Exxon trades at less than 13 times earnings and returned $32 billion to investors in 2023, or about 8% of its market value at the end of the year.

By Kevin Crowley