Tesla’s market value is higher than all energy companies in the S&P 500 combined, Bloomberg reports. The article noted that Tesla surged 43% in October, and this helped its market cap reach $1.2 trillion, which is higher than the $1.1 trillion market value of the S&P 500’s energy sector.
As of this month, Saudi Aramco has a market cap of $2.016 trillion, which makes it the world’s third most valuable company by market cap. It’s the world’s most valuable energy company globally, but Tesla is moving in on that position. In October, Visual Capitalist shared a ranking of the largest oil and gas companies in the world. Behind Saudi Aramco at #2 was ExxonMobil, at $257.3 billion, well below Tesla.
The article noted that Saudi Aramco was one of the few companies in the trillion-dollar club and that it was the world’s most profitable company in 2019. In 2020, Apple took that title away from the oil giant, but there’s a chance that it could win that title back this year due to the high oil prices.
While they are fighting over 2021, Tesla is fully invested in its growth and is coming for the rest of the energy industry. Tesla started out as an automaker that was cajoled over its mission, but has morphed into something that even Ford has recently admitted leads the industry. While Saudi Aramco may be #1 in 2021 and even 2022, it seems Tesla will have the decade.
The demand for clean energy vehicles is at an all-time high but growing fast, and Tesla sells more than just cars. It also sells renewable energy products such as solar and battery storage. Its focus on artificial intelligence, robotics, and Full Self-Driving has made it a well-known symbol of what the future of the automotive industry (and beyond) will look like.
Cathie Wood of ARK Invest said earlier this year that she believes that Tesla’s share price will reach the $3,000 mark by 2025 and that its market cap would reach as high as $4 trillion in their best-case scenario.
ARK noted that it used a Monte Carlo simulation model with 34 inputs to arrive at this forecast. To balance out its bull/best-case scenario, ARK also shared a bear/worst-case scenario which has Tesla’s 2025 price target at $1,500. In the middle of the two, ARK’s expected value for Tesla [TSLA] is $3,000, which could possibly raise Tesla’s value to equal or higher than Saudi Aramco’s. Honestly, I’m not a stock analyst and not offering advice, but it’s only a matter of time before Tesla, a clean energy company, surpasses the oil giant in value.
ARK noted that in many of the low-end cases they’ve modeled, production constraints limit Tesla to fewer than 4 million vehicles produced per year. ARK also noted that both technological and logistical bottlenecks prevent the launch of human-driven and autonomous ride-hail networks.
Tesla CEO Elon Musk’s net worth surpassed the market cap of Exxon in October. This is due to his investments in both Tesla and SpaceX, not how much money he has in the bank as some in the media and politics would have the average American believe. Benzinga noted that the jump in Elon’s net worth was caused by Tesla crossing the $1 trillion market cap milestone after it secured a massive order from Hertz for 100,000 EVs.
Bloomberg pointed out that Tesla has a higher value than the entire energy sector that it’s disrupting. This is an incredible feat, and for a company whose mission is focused on sustainability and clean energy to reach that value is inspiring. Tesla has had many challenges — in the form of vocal critics, outright snubs from the White House, and being the most heavily shorted stock on the stock market. Yet, Tesla’s value is soaring, demand is high, and people want clean energy vehicles. Tesla’s competitors are taking notes, and as they do, they admit that Tesla is leading their industry.
It’s only a matter of time before Tesla is more valuable than the most valuable oil company. As Maye Musk likes to say, clean energy will win.