Elon Musk’s march towards either overseeing one of the biggest stock market bubble pops in recent history or being the guy who opens a solar-powered portal to Hell on Mars continues unabated: Tesla is now one of the country’s top five companies by market cap.
Per CNBC, on Friday morning Tesla overtook Facebook to become the fifth most valuable U.S. company at market caps of $802.6 billion and $755.8 billion respectively (by close, the gap had expanded to $820 billion versus 763 billion). Tesla’s stock has surged 700 percent throughout 2020—with recent spikes fueled by bullish Morgan Stanley market analysis and a Democratic Senate majority that could, in theory at least, pass legislation under inbound President-elect Joe Biden encouraging a transition to electric vehicles. On Thursday, Musk became the richest man in the world at an estimated net worth of $185 billion, surpassing Amazon CEO Jeff Bezos.
Is this sustainable? Countless other analysts, including those from JPMorgan, Research Affiliates, and New Constructs have warned that Tesla stock is ludicrously overpriced, and Musk himself tweeted that “Tesla stock price is too high imo” earlier this year. The CEO also warned in an email to staff last month that if expectations of future profit dim the stock “will immediately get crushed like a soufflé under a sledgehammer.” However, Marketwatch reported that analysts at Evercore ISI have changed their tune on Tesla from sell to neutral, leaving 12 out of 37 analysts covering the company at buy, 10 at sell, and 15 at neutral.
“In reality (hindsight & rationalization, never predicted), we believe tech/retail investors see (Tesla) as two separate tech companies,” the Evercore ISI analysts wrote, stating Tesla is now perceived as both an electric car company on the one hand and an engineering firm in the autonomous vehicle, solar power energy storage, battery, and power-train markets. As of mid-December, Tesla was worth more than the nine largest automakers globally combined.
Not being a market analyst, I will simply note that all companies are technically overvalued, as we all come from dirt and to dirt we will all return. Also, the surge in amateur speculators on apps like Robinhood might have something to do with all this—I’m just throwing out ideas.
As of Friday, Musk was mulling on Twitter how best to donate his wealth. (Musk has signed the Giving Pledge, but his public contributions to charity have been limited to approximately $257 million, a fraction of his estimated wealth).
“It’s impossible to overstate the potential his fortune could have,” senior research associate at the Urban Institute’s Center on Nonprofits and Philanthropy Benjamin Soskis told Bloomberg. “We’re dealing with a scale which is difficult to fathom… He needs to be much more aggressive than he’s being now.”
Update: 1/8/2021 at 5:oo p.m. ET: This article has been updated to reflect market cap estimates (via CNBC) at end of day on Friday.