Tesla (ticker TSLA), whose shares rose $17.52 to $469.06 Tuesday, now has a market value of nearly $85 billion, almost as much as the combined $87 billion market capitalization of Ford Motor (F) and General Motors (GM).
Gary Black, a leading tobacco analyst for Bernstein in the 1990s and the former chief executive of Aegon Asset Management, isn’t fazed by Tesla’s rising market value.
“Amazon skeptics asked the same question when AMZN had $85 billion market cap. How could AMZN be worth more than Nordstrom, Kohl’s, Macy’s and Target combined? When a disruptive technology takes out existing competitors, the market discounts all future profits,” Black tweeted Tuesday. He sees Tesla’s U.S. market share rising to 10% in 2024 from 2% now. Black is now a private investor.
Black said in December that Tesla stock, then around $400, could double.
In his latest series of tweets, Black said Tesla’s market value is justifiable, writing that the “stock market is a discounting mechanism—looks forward not back.” He thinks Tesla’s annual net income will be $5 billion by 2024 and $15 billion by 2029, against a combined $11 billion annually for Ford and GM now and heading lower.
Black’s view is Tesla’s earnings per share could hit $10 a share in 2020, against a consensus estimate of around $5 a share, and $27 a share in 2024. At a price-to-earnings ratio of 30, the 2024 earnings would support a stock price of $800 a share. Black thinks that Tesla may set 2020 auto production guidance of 500,000 when it reports fourth-quarter results on Jan. 29, against a Wall Street consensus of 470,000.