Discover more from Rational Exuberance
Tesla stock continues its electrifying run
Tesla could once again top the $1 trillion market valuation mark if an uber-bullish forecast from Morgan Stanley’s star auto analyst Adam Jonas comes to fruition.
Jonas boosted his price target for Tesla to $400 a share, $50 more than what was previously the highest target on Wall Street for Elon Musk’s electric vehicle colossus.
Shares of Tesla surged nearly 9% late Monday morning to about $270, giving Tesla a market cap of just under $860 billion. At $400 a share, Tesla would be worth around $1.3 trillion. Tesla first topped the $1 trillion mark in October 2021.
Could Tesla’s stock really surge another 50% or so in a short period of time. Betting against Musk has often been a fool’s errand. Tesla shares have more than doubled this year after all. What’s more, Jonas’ optimistic forecast is based largely due to hope about the company’s Dojo supercomputer. which will be used to train algorithms for Tesla’s self-driving/autonomous cars.
Yes, Tesla is arguably one of the more overvalued stocks out there right now. For those who still care about P/E ratios, Tesla trades at the nosebleed multiple of almost 60 times 2024 earnings forecasts, a huge premium to the likes of GM, Ford, Toyota, Volkswagen and other traditional automakers.
But many of the most arduous supporters of Tesla (and Musk) don’t concern themselves with such concerns. Value investing, schmalue investing? Graham and Dodd who? Warren Buffett what? (FWIW though, Buffett’s Berkshire Hathaway is also a big investor in a EV giant. It just happens to be China’s BYD Group, not Tesla. But I digress.)
Musk, for all of his, uhh…eccentricities…has proven to be able to manage Tesla quite well despite numerous other distractions, such as SpaceX, The Boring Company, Neuralink and Twitter…excuse me, I meant X.
Tesla still has a dominant market share when it comes to EV sales, even though it has eroded a bit due to more competition. So Tesla could conceivably get to Jonas’ $400 target in a matter of time if the company continues to generate big revenue from vehicle sales and adds on other profit sources as well.
Heck, Tesla could even find its way back to Musk’s beloved price of $420. But that all depends on whether or not Tesla fans have enough “funding secured” to keep buying the stock.