Market Value – Tesla, Saudi Aramco and Apple
However, Tesla still has a long way to go before exceeding the combined market cap of Saudi Aramco and Apple, as illustrated by the graph below:
Later in the call, Elon Musk said that Optimus was entirely discarded in this computation. Optimus is Tesla’s opportunity to profit from AI-boosted robots for those unaware.
Elon began his argument by mentioning the time he predicted Tesla would surpass Apple’s market capitalization at the moment, which the company later accomplished.
Notably, the after-hours outcome was a brief upward surge followed by a more powerful and protracted downward drop, notwithstanding Elon’s hype about Tesla’s potential future stock price.
That said, stock traders may not see the long-term vision of a valuation higher than Apple & Saudi Aramco combined soon.
After the call, there was general agreement among TSLA bulls that Elon was “selling” to raise the price of Tesla’s stock. Interestingly, many have concluded that Elon has to sell more Tesla stock if he needs additional funds to purchase Twitter.
Musk may need to sell TSLA stocks to fund Twitter deal
The market has decided that the time to sell is now, regardless of whether Musk is pumping TSLA with the intention to sell more stock later.
Nonetheless, shareholders may have dropped the shares after hours for several reasons. Given that the previous estimate was for 50% growth year over year, the guidance of “just under” 50% growth may be slightly lower than some anticipated.
Furthermore, the possibility that Tesla will use its substantial cash reserve to integrate more deeply into other industries may have been blown by talk of a stock buyback in 2023.
Another potential reason is that some traders may have become uneasy when forecasts of declining gross margins as Giga Berlin and Giga Shanghai production scaled up.
It is also worth noting that concerns about issues with consumer demand may have increased with a return to the topic surrounding a less expensive Tesla. As per Elon Musk, there had been a lot of concerns regarding Tesla customer demand in the previous month.
He highlighted that there was a high level of demand and that they would sell every vehicle they could make. He claimed that demand was not at all a concern.
However, a few analysts drew attention to his remarks regarding the Chinese and European markets, which they interpreted as indications of problems with demand.
One Twitter user summarized the unexpected perspective on the demand issue, as you can see above. He Tweeted, “Elon talks too much. He mentioned that there’s a recession in China and Europe. They’re riffing on that. It’s just FUD as usual.” Elon’s detailed replies during those parts of the call to which he is alluding were as follows:
- “China is experiencing [inaudible] of a recession of sorts — from a property market mostly — and Europe has a recession of sorts driven by energy. The US — North America — is in pretty good health. Although the Fed is raising interest rates more than they should, but I think they’ll eventually realize that and bring them down again. You know, demand is a little harder than it would otherwise be, but as I said earlier, we’re extremely confident of a great Q4, and we anticipate continuing to grow our vehicle production, sales, and deliveries by on average 50% a year — as far into the future as we can see.”
- Following a brief pause, he said, “One caveat I should say: growing production by 50% every year — we’re trying to smooth out deliveries and not have this crazy delivery wave at the end of every quarter. And, in fact, we were just fundamentally running out of — there weren’t enough boats, there weren’t enough trains, there weren’t enough car carriers to actually support the wave. Tesla got too big. Whether we like it or not, we actually have to smooth out the delivery of cars [at the end of each quarter] because there just aren’t enough transportation objects to move them around.”
- “To the best of our knowledge, we believe that Tesla will continue to grow deliveries and revenue, production, at a 50% or greater compound annual growth rate.”
- “I think we happen to be in a very good spot. I wouldn’t say it’s recession proof, but it’s recession resilient. […] Yeah, we try to model out, let’s say 2023 is a brutal recession year — even then we generate meaningful cash.”
CEO Elon Musk undoubtedly made many statements on the quarterly Tesla conference call that put Tesla in a compelling way, but the stock market has so far reacted unfavorably to the updates.
Unfortunately for the automaker, it has increased skepticism among stock traders that he might be simply promoting hyping TSLA for his own Twitter-related goal.