So, Tesla (NASDAQ: TSLA) stock is up among the biggest of the techies, is it? Well, it comes bottom of the so-called ‘Magnificent 7’, named that way to mark their market dominance.
The other six are Microsoft, Apple, Nvidia, Alphabet, Amazon.com, and Meta Platforms.
At close on Friday 12 July, Apple was the biggest with a market cap of $3.5trn, with Microsoft at $3.4trn. Nvidia did briefly top the table, but it’s slipped back to a mere $3.2trn.
Meta is valued at £1.3trn in sixth place, but Tesla can’t even make a measly trillion. It’s worth a paltry $790bn, only around three and a bit times AstraZeneca, the biggest UK-listed company.
The way is up?
Tesla must be cheap, then, mustn’t it?
Cathie Wood seems to think so, for sure. She might not be as well known this side of the pond. But she’s the founder and CEO of Ark Invest, which has assets under management of around $6.7bn.
She’s put a price target on Tesla stock of $2,600 by 2029, with a range that reaches $3,100 at the bullish end.
To put that into perspective, Tesla closed on 12 July at $248. That $2,600 would need a 10-fold rise, plus a bit. It would push the Tesla market cap close to $8.3trn.
That much money today would be enough to buy up Microsoft, Nvidia, and Meta. Oh, and with enough left to buy AstraZeneca twice over.
Bears too
Not everyone is not quite so enthusiastic, though. And when I say “not quite,” I mean not within a million miles. UBS Group has just downgraded its price target to $197, labeling Tesla a ‘sell’.
That’s short-term, though. And it reflects a bit of bearishness creeping in following a delay for the firm’s big Robotaxi event, now scheduled for October.
The self-drive taxi business is what Cathie Wood’s optimism is all about. She reckons 90% of Tesla’s business could come from it by 2029. Without that, Ark Invest’s price target would only be around $350.
But if UBS is a bear, it looks like Global Equities Research is feeling bullish after setting a price target of $340-400. The mid-price of that range would mean a 50% rise from today.
So, how much?
So what do these analyst extremes mean? To me, they shout out one thing. Nobody really has much of a clue, and most of them are just sticking their fingers in the air. Some into the stratosphere and beyond.
I’d never buy based on a broker’s price target, but I do think they can be worth watching. The last time I saw what seemed like outrageous price forecasts being put on stocks, it was in the middle of the dot com boom.
Where do I think Tesla could be in five years? Though it’s a big risk, especially with competition heating up, I’m generally bullish for the long term. But what about Cathie Wood’s belief that it could be worth close to half the GDP of China? I have my doubts there.
