Tesla shares have surged since the beginning of 2020, which has led to double the stock price in only three months. By Tuesday in the late trading hours, the stock was trading at $571 dollars a share, which raised Tesla’s market capitalization to $104 billion.
The stock is now down from its all-time high of $593 dollars a share to what it is now trading at as I write this article of $566 per share, but Tesla’s market capitalization is still $100 billion making it the second most valued company only behind Toyota.
Though some critics and skeptics see the stock as overvalued commenting that it is just a bubble and it will not be long, some Wall Street analysist are even pushing the price target even higher. Pierre Ferragu from New Street who initiated coverage of Tesla over a year ago with a price target of $530 per share, has once again updated his target to $800 per share.
According to Ferragu
“We conclude that over the past 1.5 years several key dimensions of our thesis (technological dominance, strong sustained demand, Tesla’s ability to execute) played out in line with our expectations. We did not anticipate the decline in Model S&X deliveries last year, as Model 3 ramped, but this has limited implications for our long-term perspective.”
Ferragu currently estimates that Tesla is on a path to sell 2 to 3 million cars per year after 2025 for a market cap of $230-350 billion:
“We hence stick to our views and expect Tesla to sell 2-3 million cars per year after 2025, at industry-leading margins, justifying a market capitalization of $230-350 billion, or ~$1,100-1,700 per share. Discounted back to early 2021, we would see that fully priced with a stock in the $640-960 range. On that basis, we increase our target price to $800.”
Now that Tesla can work on its research and development on new battery technologies, solar and many of its other ambitions.
For Musk, hitting $100 billion in market value triggers an option to buy 1.69 million shares of Tesla stock for $350.02 per share. If he sells the shares, he would make just over $371 million.
But for the option to work market capitalization must average above $100 billion for the following six months according to the compensation package detailed in the U.S Securities and Exchange Commission.
Hang in there. If you are truly long-term, it will be fine.— Elon Musk (@elonmusk) October 4, 2018