Courteasy of Tesla's stock surge in the past few weeks, Elon Musk can now afford to acquire the second largest U.S. car maker outright.
Tesla (NASDAQ:TSLA) CEO Elon Musk is the biggest net worth gainer this year.
So far, Musk’s wealth is up by $13.5 billion less than 40 days into 2020. After Tesla stock rose by nearly 20% on Monday, he is now worth $41 billion. That number continues to surge as Tesla climbs to astronomical valuations.
If TSLA is able to return above $900, Musk could further increase his wealth by over $2 billion, putting him closer to the world’s ten wealthiest people. Musk currently owns slightly over 34 million shares of Tesla.
Based on Musk’s wealth as of Monday, he could easily acquire Ford (NYSE:F) and leave some spare change to purchase more than 11% of General Motors (NYSE:GM).
Ford’s market cap currently stands at $36.4 billion. If Musk were to liquidate all his assets, he could purchase all the outstanding shares of Ford in one fell swoop. The remaining balance could be enough to purchase a sizable chunk of General Motors, whose market cap currently stands at $49.1 billion.
Tesla’s market cap has baffled many, given its fundamentals relative to other car makers. In terms of revenues, Ford Motor Company and General Motors lead Tesla by huge margins. Ford recorded $37 billion in revenues in Q3 2019, its most recent reported quarter. General Motors registered $35.5 billion in revenues during the same period.
In its most recent quarter, Tesla saw $6.36 billion in automotive revenues. In making their case, the bulls argue that Tesla should not be viewed as an auto manufacturer but as a technology company.
Still, the electric carmaker is now one of the most shorted stocks as a result of valuation concerns. Currently, Tesla boasts the highest ratio in terms of short interest relative to float, according to S3 analytics’ Ihor Dusaniwsky.
Among those who are urging caution regarding Tesla is technical analyst Carter Worth. On Monday he stated that TSLA is displaying the same behavior as bitcoin, cannabis stocks and dotcom stocks just before they experienced a crash.
Currently, the consensus analyst rating for TSLA is “hold” with 12 “sell” calls against seven “buy” calls. The average price target is $493. Tesla’s current price is around 80% higher than the target.
Tesla bulls are not about to be dissuaded though. Baron Capital’s Ron Baron stated that Tesla possesses the potential to record exponential revenue growth over the next ten years:
This year tesla is going to do $32 billion in revenues. They are going to do a $100 billion in revenues within four years. And I think they have a potential for $1 trillion in revenues within ten years.
Disclaimer: The above should not be considered trading advice from CCN.com.
This article was edited by Sam Bourgi.