Topline
Tesla shares built on their historic Thursday rally as the electric vehicle maker closed the week on a high note, the latest twist in the ever-volatile stock market action for the firm helmed by Elon Musk, the world’s richest man.
A Tesla Cybertruck at a car show in Paris earlier this month.
Key Facts
Tesla stock rose 3.4% Friday to $269.19, its highest end-of-day share price since Sept. 2023.
That comes on the heels of the stock’s biggest single-day gain since May 2011, as shares leapt 22% in Thursday trading after the company’s earnings report smashed analyst forecasts for third-quarter profits and Musk prognosticated up to 30% vehicle delivery growth in 2025.
The 26% two-day gain for Tesla added about $157 billion to its market capitalization, bringing its market cap from $686 billion to $843 billion.
Big Number
$31 billion. That’s about how much richer Musk was Friday than he was at the close of Wednesday’s normal trading hours thanks to the Tesla stock rally. Musk, who is Tesla’s largest shareholder with a 13% outstanding stake, is more than $60 billion richer than the next wealthiest person in the world with a $275 billion net worth.
Key Background
The Tesla rally helped send the tech-heavy Nasdaq Composite index to a record intraday high Friday. Tesla still remains about 35% below its record closing share price of $410 set in November 2021 as the pandemic-era Tesla buying spree hit a fever pitch. Tesla has far underperformed the broader market during the 35-month stretch, with the S&P 500 returning 30% over the same period. The slip has accompanied a major slowdown in growth in the company’s core EV business, as consensus analyst estimates call for a 2% year-over-year decline in Tesla vehicle deliveries this year, which would be not just the first negative growth for the company dating back to 2016, but the first time below 35% growth. Though Tesla’s primary EV business showed signs of hope this week, with adjusted automotive profit margins climbing to a six-quarter high during Q3, much of its recent rally stems from optimism about its autonomous vehicle and artificial intelligence initiatives. Just ask Musk, who says people should only own Tesla stock if they believe the company can solve autonomous driving.
Contra
UBS analysts led by Joseph Spak ascribe just $51 per share in value to Tesla’s backbone electric vehicle and solar energy businesses, meaning the market is pricing in more than $500 billion of value to Tesla’s machine learning prospects. Tesla’s fundamentals also point to a valuation based on earnings potential well down the line, as the company’s 86 price-to-earnings ratio is by far the steepest of any of the U.S.’ 15 $500 billion public firms, doubling runner-up Eli Lilly at 43 (price-to-earnings, or P/E, is a popular valuation metric comparing a company’s market value to its average projected profits over the next 12 months).
