Should I Buy Tesla Shares Now?

Here's what you have to believe to justify the eye-popping value that the market is placing on the company's stock

Dave Sekera, CFA 8 February, 2021 | 9:07AM
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Tesla

Tesla's (TSLA) stock price surged an astounding 743% in 2020, a growth rate that would have put many dot-com stocks to shame during the tech bubble in the late 1990s. Although the stock briefly dipped at the end of January 2021, the price has risen another 24% thus far this year.

The value the market is placing on Tesla is eye-popping. At the current stock price, the market value of its equity is $825 billion, making Tesla the sixth-largest company by equity market capitalisation in the Morningstar US Market Index. At its current market cap, Tesla's equity is 8 times more valuable than the world's largest auto manufacturer, Volkswagen (VOW3), and approximately 7 times the combined equity valuation of both General Motors (GM) and Ford (F). Over the course of 2020, Tesla's equity market cap increased by almost $600 billion, which is greater than the total equity market cap of Warren Buffett's Berkshire Hathaway (BRK.B).

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Dave Sekera, CFA  is a senior securities analyst with Morningstar.

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