Elon Musk’s latest lofty prediction for Tesla (TSLA) looks pie in the sky, even by his standards.
“I see a potential path to be worth more than Apple and Saudi Aramco combined,” Musk proudly proclaimed on the company’s earnings call on Wednesday.
Doing the math, that would put Tesla’s worth at about $4 trillion at some point. Tesla’s current market cap is $652 billion, according to Yahoo Finance data.
Analysts say that valuation may not happen for eons, if at all.
“That seems quite a bit of a stretch,” Colin Langan, equity analyst at Wells Fargo, said on Yahoo Finance Live (video above). “You would have to give them full credit for all of these factors that I consider more long-term optionality issues. So things like whether you can get true level four self-driving, whether there is some value in the Optimus bot, Dojo, and these future projects. I think from a pure automaker side, that [valuation] is going to be extremely difficult to do.”
Tesla’s path toward Musk’s newest goalpost was off to a rocky start on Thursday.
Tesla stock fell more than 6% as of 1:40 p.m. ET as the EV maker warned that it would not meet its 50% growth target for deliveries this year. Tesla’s total revenue for the third quarter also fell short of analyst estimates.
Wall Street also speculated that a slowdown in Tesla sales in China may be coming soon, which could put further pressure on the stock.
“Tesla continued to attribute the 3Q delivery miss to ending the historical delivery wave to help reduce logistics costs, but we believe weaker demand in China is the most likely explanation,” Guggenheim analyst Ali Faghri wrote in a note to clients. “We highlight the following: 1) final week deliveries in China were likely down 30%+ vs. 2Q levels (could be ending the delivery wave, could be weaker demand); 2) Tesla placed a modest incentive on China vehicles in September to push sales towards the end of the quarter; 3) wait times in China compressed from 20+ weeks to 1-4 weeks at the end of 3Q; 4) overall BEV sales in China remain strong but Tesla is losing share. While these items individually are not a big concern, collectively they point to potential demand saturation in China.”
Faghri reiterated a Neutral rating on Tesla’s stock, adding: “We expect Tesla to cut prices in 4Q and currently embed a 5% price cut in China next year in our model (although it could end up being greater).”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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Source: https://finance.yahoo.com/news/tesla-valuation-4-trillion-stretch-174255913.html