Tesla Inc. TSLA has emerged as the frontrunner in the global electric vehicle market, overcoming teething problems and a funding crunch in 2018 that nearly led to its bankruptcy.
What Happened: In 2019. the company received a lifeline from German automaker Daimler, which has now renamed itself as Mercedes-Benz Group AG MBGAF. Tesla bull Ross Gerber, co-founder and CEO of Gerber Kawasaki Wealth And Investment Management, suggested that it’s a missed opportunity that Daimler did not go on to buy Tesla.
“Worse than blockbuster not buying Netflix early. Daimler owned 9% of Tesla for $50 mil and sold very early on,” Gerber said. When the fund manager first bought Tesla stock, he had thought the legacy automaker would buy out Tesla, he added.
Daimler first picked up a 9.1% stake in Tesla in May 2019 for $50 million. The company’s 2010 annual report showed that the automaker had about a 7.9% equity investment in Tesla, with a fair value of about 149 million euros ($145.9 million) as of Dec. 31, 2010. The automaker also had a representation on Tesla’s board.
This stake tapered off to 4% by 2014, and Daimler liquidated its entire stake and netted a profit of $780 million, Reuters reported.
See Also: Tesla Seeing $500B Eroded From Valuation In 2 Months Is Buy Opportunity: Analyst Sees 100% Upside
Why It’s Important: Brick-and-mortar video rental company Blockbuster, which once had a thriving business, failed to see the change that came along as businesses gravitated online. The company once had the honor of being the world’s biggest in its business and owned over 900 stores and boasted about 50 million members.
Netflix Inc. NFLX, which was a startup back then, had approached Blockbuster for selling itself for $50 million in 2000, which was promptly turned down.
It’s déjà vu for Daimler now, as a rapid electric vehicle transition is underway, and Tesla, by virtue of its head start, is way ahead of the competition.
Price Action: Tesla closed Wednesday’s session 7.82% higher at $183.20, according to Benzinga Pro data.
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