Tesla Motors Inc (NASDAQ:TSLA) has continued its upward march for most of the year, and it’s by far the best performer in the over $10 billion market capitalization club. The EV automaker’s stock has surged an incredible 410 percent so far this year. According to Tom Gara’s post on The Wall Street Journal’s Corporate Intelligence blog, the second best in that club is Netflix, Inc. (NASDAQ:NFLX), which has risen about 286 percent this year.
Speculating about Tesla
But just how much higher can Tesla shares possible go? After all, the company’s valuation is based purely on speculation at this point. The company was one of the most popular short positions earlier this year, and its initial surge triggered a short squeeze. We started to see shorting of Tesla Motors Inc (NASDAQ:TSLA) decline steadily since late March, and it’s holding fairly steady now, although a large number of those who were betting against the stock changed their view of it. Jeffrey Gundlach of DoubleLine Capital said recently that he’s afraid to short Tesla right now because there’s no telling where a cult stock like this one will go.
Carlson Capital's Black Diamond Arbitrage Partners fund added 1.3% net fees in the first quarter of 2021, according to a copy of the firm's March 2021 investor update, which ValueWalk has been able to review. Q1 2021 hedge fund letters, conferences and more At the end of the quarter, merger arbitrage investments represented 89% of Read More
Even in May, Tesla Motors Inc (NASDAQ:TSLA) already looked expensive after gaining 54 percent in two months. At that point, it traded at around 121 times the company’s expected earnings and had a market cap of $6.1 billion. Now its market cap is up over $20 billion—all because of speculation about what the company can do rather than fundamental estimates.
What’s Tesla really worth?
Shares of Tesla Motors Inc (NASDAQ:TSLA) are now selling for about three times as much as they were in May as more and more investors come to believe that the EV automaker will be able to do great things. Many are actually expecting the company to hit its 20,000 vehicle goal this year and blossom up to selling more than 400,000 vehicles annually by 2025. This is where the astronomical valuation comes in, but again, it’s pure speculation.
Even CEO Elon Musk thinks the market is being generous with his company’s valuation, and it’s his visions that are driving the company’s future. So what is Tesla really worth? Everyone wants to know, but we won’t know until we get another year or two down the road.