What Does It Take To Be Worth $500 Billion?


On August 31st Tesla‘s latest bull run ended when the stock closed at an all-time of $498.50 per share. At that price, the market cap value of Tesla (TSLA) was $464 billion, an amount greater than Ford, GM, Daimler, Volkswagen, and former number one Toyota put together. With Tesla approaching $500 billion, a level reached by only a handful of companies most notably today’s tech giants, Apple (AAPL), Amazon (AMZN), Google (GOOG), Facebook (FB), and Microsoft (MSFT), we at Cornell Capital Group thought it would be a good time to examine what is required to be a $500 billion market cap company. Before investors conclude that Tesla is a $500 billion company, they should consider what the tech giants looked like when they reached that level.


The Tesla/Apple Comparison

value of Tesla was $464 billion, an amount greater than Ford, GM, Daimler, Volkswagen, and former number one Toyota put together. With Tesla approaching $500 billion, a level reached by only a handful of companies most notably today's tech giants, Apple, Amazon, Google, Facebook, and Microsoft, we at Cornell Capital Group thought it would be a good time to examine what is required to be a $500 billion market cap company. Before investors conclude that Tesla is a $500 billion company, they should consider what the tech giants looked like when they reached that level.

The most common justification for Tesla’s high valuation is the “Tesla is a tech company, not a car company” story. A key element of that story is the Tesla/Apple comparison, a favorite amongst Tesla bulls, who point to the size of the global cell phone market before the iPhone as evidence of Tesla’s massive growth potential. In the Tesla/Apple analogy, legacy auto companies play the part of Nokia, Blackberry and Motorola while Tesla is the iPhone maker. Extending the analogy further, Tesla's Model 3, like the iPhone, is supposed to be the product that redefines the industry by convincing car buyers to pay more for a technologically advanced car in the same way Apple took what appeared to be an expensive niche item and gave it mass market appeal. Apple was also able to cash in on the iPhone's popularity by creating a new high margin market for apps and digital downloads via iTunes something Tesla hopes to emulate by selling Full Self Driving (FSD) and eventually a rideshare service via autonomous robotaxis. Unfortunately, unlike Apple who profited immediately from digital sales, Tesla has been slow to roll out the new features as promised.

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Disclaimer: Cornell Capital Group LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or ...

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Alpha Stockman 8 months ago Member's comment

Good article. Looking forward to seeing more by you.