Elon Musk Says Tesla Will Be Bigger Than Apple. Gets Reality Check
Elon Musk sees Tesla Inc. becoming bigger than the combined valuation of Apple Inc. and Saudi Aramco one day. Wall Street is saying, not so fast.
The electric-vehicle maker reported lackluster third-quarter results on Wednesday, with revenue and margins missing estimates even as profit beat. This is the first time the company missed revenue estimates since the third quarter of 2021, data compiled by Bloomberg show. Chief Executive Officer Musk also said demand was a “little harder than it would otherwise be,” due to downturns in China and Europe.
The results and the cautious stance on demand prompted multiple analysts to lower their price target on the company on Thursday. The average price target on the company stands at $293, according to Bloomberg data, over 40% higher than the stock's Thursday close. Tesla shares closed down 6.7% at $207.28.
“We remain cautious on valuation, particularly in the context of lofty unit volume growth expectations, and continue to see material downside risk to our December 2023 price target,” JPMorgan analyst Ryan Brinkman wrote in a note.
Tesla, which was briefly a part of the trillion-dollar valuation group, currently has a market capitalization of about $650 billion. Apple has a $2.3 trillion value, while Saudi Aramco's stands at roughly $2.1 trillion.
As the US consumer gets squeezed between high inflation and rapidly rising interest rates, investors are keeping an eye on demand for discretionary items and big-ticket purchases like a car this earnings season. After Tesla earlier this month reported third-quarter deliveries below expectations, analysts and investors have been watching for any signs of cracks in demand.
Risks to demand is an especially fraught concern for Tesla
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