Skip to main content
No. of Recommendations: 9
(that's a market cap of $20.5 trillion--I'm pretty confident that the chances of that are smaller than 1 in 8)

The $22,000 price target made by ARKW in February was pre-split, so it equates to $4,400 post split. That means the projected market cap is only about $4T (not $20T). By comparison, MSFT has a current market cap of $1.65T, so they're saying that TSLA has a 12% chance of being a little more than twice as valuable as Microsoft.

And, to be fair, their median price target for 2024 is $1,400 post split, which is a market cap of only $1.1T (far less than what MSFT is valued at today).

I know better than to make predictions, but I think these market cap projections for Tesla are quite plausible. Remember that dominant companies in trillion-dollar markets like retail and energy are incubating services that you can't easily predict how disruptive they are. For example, could you have predicted that Amazon would expand from books to electronics, and then to provide a fulfilment platform for 3rd party sellers, then to create Amazon Prime and grow that to 100 million plus members, then to create a whole new industry of Cloud computing generating $30B of annual revenue? Or could you have predicted that Netflix would expand from DVDs by mail, to streaming content on demand, and now producing big budget movies and TV series?

Tesla already generates 6% of its revenues purely in battery products (not cars), and that product, by itself, is projected to compound sales at 50% annually over the next 8 years.

I admit that I missed Tesla as an investment, and chose instead to invest heavily in SaaS companies over the past 4 years instead. No regrets. But the reason I missed TSLA has nothing to do me balking at the P/E ratio. A P/E ratio is a meaningless trailing figure for a growth company that is in the middle of a hyper-adoption curve. The reason I missed it is that I understand SaaS companies really well (I work in this field), and I have a poor understanding of electric vehicle companies.

As for Mark's original question about who has been buying Tesla shares recently, the answer is hundreds of asset managers and financial institutions. Ray Dalio (billionaire founder of Bridgewater Capital), Wells Fargo, CALPERS (pension fund for teachers), D.E. Shaw (the hedge fund that Bezos used to work at) - they all own millions of dollars of Tesla shares and have been adding lately.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.