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On October 25, Tesla shares rose 3.4% to $269.19, their highest closing price since September 2023.
This came after the stock's biggest one-day jump in prices since May 2011, as the stock surged 22% on October 24. Thus, Elon Musk's company beat analysts' estimates for profit in the third quarter. The richest man in the world predicts a 30% growth in car deliveries in 2025, Forbes reported.
The two-day gain of 26% added about $157 billion to Tesla's market cap. The value of the company jumped from 686 to 843 billion dollars.
Thus, Musk became richer by 31 billion dollars compared to October 23. He is the largest shareholder in Tesla with a 13% stake. And now he is more than 60 billion dollars richer than the second richest man in the world. His net worth is estimated by Forbes at 275 billion dollars.
Tesla's rally also helped the tech Nasdaq Composite hit a record high on Oct. 25. However, Tesla is still about 35% below its all-time stock price of $410, reached in November 2021. That's when demand for Tesla cars was at its peak.
Over the past 35 months, the company has significantly underperformed the broader market, as the S&P 500 has returned 30% over the same period.
Analyst estimates suggest a 2% year-over-year drop in Tesla vehicle deliveries this year. This will not only be the company's first negative growth since 2016, but also the first time growth has been below 35%.
The electric vehicle business showed signs of optimism this week, with adjusted profit margins hitting a six-month high in the third quarter. Much of the recent growth has been driven by optimism about Tesla's autonomous driving and artificial intelligence (AI) initiatives. Musk argued that people should only own Tesla stock if they believe the company can solve the problem of autonomous driving.
UBS analysts led by Joseph Spack attribute just $51 of Tesla's stock value to the company's core businesses of electric vehicles and solar panels. That means the market values Tesla's machine learning projects at more than $500 billion.
Tesla's fundamentals also point to a valuation based on future earnings potential, as the company's price-to-earnings ratio of 86 is by far the highest among the 15 publicly traded US firms worth more than $500 billion, double higher than the next highest ratio, Eli Lilly, which is 43 (the price-to-earnings ratio, or P/E, is a popular valuation metric that compares a company's market value to its average forecast earnings over the next 12 months). | BGNES
