More than 670% jump in Tesla shares this year has boosted Elon Musk's net worth from $27 billion to $155 billion, making him the second-wealthiest person in the world, but now even the man of the hour is warning investors that Tesla (NASDAQ:TSLA) stock is way overvalued--and in the meantime, he may be moving to Texas for tax considerations.
Tesla’s stock has now soared over 90% over the past three months and well over 600% year to date, boosting the company’s market capitalization--as of market close Wednesday--to nearly $573 billion.
Last month, S&P 500 announced it would add Tesla shares on December 21, resulting in another share price spike on the news.
Now, Tesla will take advantage of this bonanza by selling additional shares worth up to $5 billion.
According to a filing earlier this week with the SEC, Tesla will sell these shares “from time to time” and “at market prices.”
The company already raised $2.3 billion in cash through a round of stock sales in February and an additional $5 billion in September.
But things are about to get interesting, in a potentially volatile manner.
Tesla stock has shot up for a number of reasons, but the biggest driver hasn’t been existing fundamentals as much as it has been a massive barrage of positive news for EVs in general and for a green energy transition more broadly.
And now the other shoe may be about to drop.
No one predicted that more devastatingly than JP Morgan’s Ryan Brinkman, who earlier put an $80 price target on Tesla and this week generously raised that to $90.
Brinkman may be one of the best-known Tesla bears out there, but he’s not the only one. GLJ Research's analyst Gordon Johnson has a $40 price target for Tesla.
Even Elon Musk has warned investors that the stock had overshot the moon--and then some.
In May, Musk drove the price down 10% after taking to Twitter to suggest that the stock was overvalued.
In the meantime, most other analysts come in with an average price target for TSLA of around $364.
And the bulls are still … bulls.
Some view Tesla stock as unstoppable, fundamentals be damned.
Late last month, Wedbush analyst Dan Ives raised a bull-case target from $800 to $1,000.
“With the sustained path to profitability and S&P 500 index inclusion achieved, the Tesla bull story is now all about a stepped-up EV demand trajectory into 2021,” Ives wrote in a note to clients.
In October, billionaire investor Ron Baron said he believed Tesla would be a $2 trillion company and that he believes Tesla’s vehicle sales will grow 50% annually in the coming years.
And now, rumor on the street is that Musk may be ditching California--which has some of the highest tax rates in the United States--for the Lone Star state. But Texas is also home to Tesla’s new electric car plant and is a key venue for Musk’s SpaceX venture, so it makes sense on a number of levels.
In May, local officials refused to let the company reopen Tesla’s Fremont, California, factory due to the pandemic. “If a team is winning for too long, they tend to get complacent. California has been winning for a long time, and I think they’re taking it for granted,” Musk said.
By Tom Kool for Safehaven.com
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