Will Tesla Stock Hit $1,000?

Tesla Inc (NASDAQ:TSLA) raced to the front of the pack of American auto manufacturers. The company’s promise of a future with electric vehicles is officially here, and it entered the S&P 500 in 2020 after growing by almost 1,000 percent in value within the course of a year.

As the new year kicked off, Tesla continued to reach toward a new high, leaving some investors wondering will Tesla stock hit $1,000?

That possibility isn’t a pipe dream and could value the company at around $1 trillion, making it one of the most valuable companies in the world. It’s elite company, shared by titans like Microsoft (MSFT), Apple (AAPL), and Amazon (AMZN).

Tesla builds more than cars – it built an electric charging network that can support cross-country travel using zero gas. Its cars are updated remotely and have sophisticated software that enables all the latest vehicle technology.

Once the vehicle is sold, the company earns revenue from the aftermarket sales at charging stations. In a way, it built both Ford (F) and Chevron (CVX). That’s what has investors believing it deserves its perch at the top of the auto industry.

In fact, Tesla CEO Elon Musk briefly surprised Amazon Jeff Bezos as the wealthiest person in history in 2021.

Elon Musk: The Richest Man in the World

Bezos filled headlines in 2020 by earning over $100 billion during the calendar year, even briefly surpassing $200 billion in net worth. This accounts for more than 10 percent of the $931 billion added to the collective net worth of the 614 richest people in America.

His ex-wife McKenzie Scott’s net worth of $60 billion is growing faster than she can give it away. The Bezos fortune is so large that a new term was coined to describe it in 2020: centribillionaire.

And he’s not alone – there are now five centribillionaires in the country. Elon Musk is one of them.

In fact, depending on the day, Musk could be worth than Bezos. Musk briefly surpassed Bezos in the first week of January 2021, after Tesla’s market capitalization grew another 20 percent. Not only that, but Musk owns 20 percent of Tesla, versus Bezos’s 11.1 percent Amazon stake.

This means Musk’s fortune could continue to outpace Bezos if Tesla catches up to Amazon’s market valuation. There’s not a small chance it will do that too, but the odds of it coming crashing down to earth are high too.

Just ask Michael Burry.

The Big Short’s Michael Burry Is Short Tesla

Anyone familiar with the book and movie The Big Short knows Burry as the investor who place a billion-dollar bet against the U.S. housing market at its height. His Scion Asset Management fund is one of the most respected in the financial industry because of the money he made his investors.

Burry is now shorting Tesla, which he started in December 2020 after seeing its exponential rise to become the biggest car company in the world.

Like the housing market, he has a rocky road ahead of him. The short referenced in the movie wasn’t a one-and-done situation – Burry lost money and investor confidence for two years while waiting for the payout.

It did inevitably pay out, and Burry bets it’s going to happen again with Tesla. He notes the similarities in its market growth to that of Bitcoin. In one December day, it gained 8 percent. That equates to about $60 billion, which he tweeted to his followers is “1 GM, 2 Hersheys, 3 Etsys, 4 Dominos, 10 Vornados.”

He believes investors are paying premiums today for tomorrow’s growth potential. Although Tesla has a wide network of charging stations, it sells fewer vehicles in a year than bigger manufacturers do in a quarter.

And he’s not the only one shorting the stock. These investors aren’t happy.

Tesla Has Burned Shorts For Years

Short sellers long discussed the potential downsides of Tesla – it’s valued like an expensive tech stock and doesn’t have the earnings to back it up. But investors love it, and it continues gaining value, much to the chagrin of naysayers.

Greenlight Capital hedge fund manager David Einhorn is notorious to World Series of Poker fans. He’s an avid anti-Musk analyst who tanked Greenlight’s third quarter 2020 earnings report when Tesla rallied and his short shrank.

That led to a 6.5 percent loss over the first nine months of the year, totaling $22.8 million. This position was at the wrong end of a 568 percent stock price increase, and things only got worse in 2021, with short sellers losing an estimated $1 billion in the first week alone.

This only further solidifies the Tesla fans’ chants that the company is unstoppable. It fuels further investment in the company at higher prices. And its wide price swings have everyone worried what can happen at any given day.

Everyone but Ark Investment Management founder Catherine Wood, anyway.

Catherine Wood Was Right: Her New TSLA Prediction

Wood believes short sellers are going to lose their shirts. In fact, she believes share prices will reach $6,000 per share over the next five years. This is up from the $4,000 per share announced in February 2018.

There are several market conditions leading to this conclusion, including Tesla’s ability to buy a legacy car manufacturer.

Its biggest hurdle in scaling is building out a manufacturing footprint. But if it can buy an existing one that also has decades of vehicle designs, Tesla could turbo boost further ahead.

And that leads many bulls to believe Tesla will easily surpass $1,000 per share in 2021.

Will Tesla Hit $1,000?

Tesla is the biggest car manufacturer in the world, and it’s only getting bigger. Musk steered the company through exponential gains in 2020 and continued delivering forecasted electric vehicle volumes while meeting key milestone deadlines.

Not only does it sell cars, but it also runs the charging stations keeping them running. It’s a brilliant business model that earned it a spot on the S&P 500.

Short sellers are piling against the stock, and they had already lost $1 billion by the end of the the first week of 2021. It made Musk the world’s richest man for a moment. He may be battling Bezos for that crown for years to come.

The only question is whether investors will get rich with them.

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.