Who Convinced Elon Musk of His Prediction That Tesla Shares Will Be Worth $4.4 Trillion? Every generation it seems.
A day after Tesla’s CEO boldly said the electric car maker’s value will surpass Apple (AAPL) and Saudi Aramco combined, Apex Fintech Solutions found that the company is a top holding company of every generation of investors. Tesla is the number 1 holding company of investors from Gen Z, Millennial and Gen X. And it is the number 2 most popular stock, right after Apple, with baby boomers.
And it’s easy to see what they’re looking for—huge dreams of wealth sparked by Musk’s roar. “I believe we could well exceed Apple’s current market cap. In fact, I see a potential path with Tesla that will be worth more than Apple and Saudi Aramco combined,” Musk said in an Oct. 19 conference call with investors. . .
But is that claim even possible?
Putting numbers behind Musk’s huge claim
It is important to note how bold Musk’s claim is. The numbers describe it with precision.
Tesla stock is now worth $696 billion. That is not unimportant. It is already the fourth most valuable company in the S&P 500 with a weight of 1.9%. Tesla is ahead of titans such as UnitedHealth Group (UNH) and Johnson & Johnson (JNJ). It is also slightly ahead of Warren Buffett’s Berkshire Hathaway (BRKA).
But Musk’s claims are still more than bold. Apple alone is worth $2.3 trillion. Shares of Tesla would have to rise more than 230% to match Apple’s market value — and that’s if Apple’s stock doesn’t rise any further. Tesla’s per share price would have to be over $730 per share, down from just 206 now, just to match Apple’s market value.
However, the forecast is all the bolder when you add Saudi Aramco’s market value to it. The giant oil producer is valued at $2.1 trillion. Adding that to Apple will give Tesla a $4.4 trillion valuation to satisfy Musk’s claim. That calls for Tesla stock to rise more than 530% to over 1,400 per share.
Impossible? No. Difficult? Terribly. Even Musk said in his conversation with investors, “So that doesn’t mean it’s going to happen or it’s going to be easy. In fact, I think it’s going to be really hard. It’s going to take a lot of work, some very creative new products, managed expansion and always happiness.”
However, investors are on board with the bold call for the S&P 500 stock. And they hold on for life, despite a rocky year.
Shares of Tesla are down more than 36% this year, clearly outperforming the 22% drop in the S&P 500. But nevertheless, investors of most generations consider Tesla their best option across the entire S&P 500. Apex studied the interests of 8 million securities accounts. And Tesla is the biggest bet of almost all investors.
Tesla can be found in an impressive 22.4% of the top 100 millennials stocks, by far the most widely held individual stocks, Apex found. In fact, it’s held about twice as often as their number 2 most popular stock: Apple.
Also Gen X is big on their generation’s capitalist hero (Musk is 50 years old, making him a member of Gen X). Tesla has a 21.4% position in the top 100 stocks in that generation’s portfolios, again outperforming Apple’s 14.9% weighting. And it’s also a top spot with Generation Z, at 20.6%.
The only generation that is even remotely skeptical are the boomers. But not much. Apple is their largest share of portfolios at 20.3%. But No. 2 with 13.9% is Tesla.
Could Musk and Tesla’s Stocks Really Do the Seemingly Impossible? He said he’s done it before.
“A few years ago, I think, on our earnings call, I said I thought it was possible that Tesla might be worth more than Apple, then the company with the highest capitalization,” Musk said. “And we didn’t just achieve that. Tesla … in fact … passed Apple’s market cap at the time.”
Gen Z’s Biggest Guess: Tesla Stock Rank Company Symbol % of shares in the top 100 most popular shares of Gen Z YTD % ch. Sector Market Value ($ billions) 1 Tesla (TSLA) 20.6% -41.3% Consumer Discretionary $649.5 2 Apple (AAPL) 13.8 -19.3 Information Technology 2,304 3 Amazon.com (AMZN) 6.9 – 30.9 Consumer Discretionary 1,174 4 Microsoft (MSFT) 4.1 -29.8 Information Technology 1,764 5 AMC Entertainment (AMC) 3.4 -76.8 Communication Services 3.3 6 Nvidia (NVDA) 2.7 -58.6 Information Technology 303.5 7 Alphabet (GOOG) 2.1 -30.7 Communication Services 1,307 8 Alphabet (GOOGL) 2.1 -30.7 Communication Services 1,307 9 Walt Disney (DIS) 1.9 -36.4 Communication Services 179.7 10 Metaplatforms (META) 1.6 -60.8 Communication Services 353.5 Sources: Apex, IBD, S&P Global Market Intelligence