Who has Elon Musk convinced of his prediction Tesla stock will be worth $4.4 trillion? Every generation it seems.
A day after the Tesla CEO boldly said the electric-car maker's value will surpass Apple and Saudi Aramco combined, Apex Fintech Solutions found the company is a top holding of every generation of investors. Tesla is the No. 1 holding of Gen Z, Millennial and Gen X investors. And it's a close No. 2 most popular stock, right after Apple, with baby boomers.
And it's easy to see what they're after — huge dreams of riches fanned by Musk's bluster. "I am of the opinion that we can far exceed Apple's current market cap. In fact, I see a potential path with Tesla to be worth more than Apple and Saudi Aramco combined," Musk said during the Oct. 19 earnings conference call with investors.
But is that claim even possible?
Putting Numbers Behind Musk's Huge Claim
It's important to note just how bold Musk's claim is. The numbers spell it out with precision.
Tesla stock is now worth $696 billion. That's not insignificant. It's already the fourth most valuable company in the S&P 500 with a weight of 1.9%. Tesla is ahead of titans like UnitedHealth Group and Johnson & Johnson. It's also marginally ahead of Warren Buffett's Berkshire Hathaway.
But Musk's claims are still more than bold. Apple alone is worth $2.3 trillion dollars. Shares of Tesla would need to rise more than 230% just to match Apple's market value — and that's if Apple's stock doesn't move any higher. The per-share price of Tesla would need to hit more than $730 a share, up from just 206 now, just to meet Apple's market value.
The forecast is all the more brazen, though, when you add in the market value of Saudi Aramco. The giant producer of oil is valued at $2.1 trillion. Adding that to Apple makes a $4.4 trillion valuation for Tesla to reach to satisfy Musk's claim. That calls for Tesla stock to rise more than 530% to more than 1,400 a share.
Impossible? No. Difficult? Very. Even Musk said in his call with investors: "So now that doesn't mean it will happen or that it will be easy. In fact, I think it will be very difficult. It will require a lot of work, some very creative new products, managed expansion and, always, luck."
Winning Over Believers
Investors, though, are on board with the bold call on the S&P 500 stock. And they're holding on for dear life despite a rocky year.
Shares of Tesla are down more than 36% this year, starkly underperforming the 22% drop in the S&P 500. But nonetheless, investors of most generations see Tesla as their best option in all of the S&P 500. Apex studied the holdings of 8 million brokerage accounts. And Tesla is the biggest bet of nearly all investors.
Tesla is found in an impressive 22.4% of millennials' top 100 holdings, by far the most widely held individual stock, Apex found. In fact, it's roughly twice as commonly held as their No. 2 most popular stock: Apple.
Gen X, too, is in big on their generation's capitalistic hero (Musk is 50 years old, making him a member of Gen X). Tesla has a 21.4% position among the top 100 stocks in that generation's portfolios, again outranking Apple's 14.9% weight. And it's a top holding with Generation Z, too, at 20.6%.
The only generation that's even slightly skeptical are the boomers. But not by much. Apple is their top holding in portfolios at 20.3%. But No. 2 at 13.9% is Tesla.
Could Musk and Tesla stock actually pull off the seemingly impossible? He said he's done it before.
"Several years ago I said, I think, on our earnings call, that I thought it was possible for Tesla to be worth more than Apple, which was then the highest cap company," Musk said. "And we didn't only achieve that. Tesla ... in fact ... passed Apple's market cap at the time."
Gen Z's Biggest Bet: Tesla Stock
| Rank | Company | Symbol | % of stocks in Gen Z's top 100 most popular | Stock YTD % ch. | Sector | Market value ($ billions) |
|---|---|---|---|---|---|---|
| 1 | Tesla | 20.6% | -41.3% | Consumer Discretionary | $649.5 | |
| 2 | Apple | 13.8 | -19.3 | Information Technology | 2,304 | |
| 3 | Amazon.com | 6.9 | -30.9 | Consumer Discretionary | 1,174 | |
| 4 | Microsoft | 4.1 | -29.8 | Information Technology | 1,764 | |
| 5 | AMC Entertainment | 3.4 | -76.8 | Communication Services | 3.3 | |
| 6 | Nvidia | 2.7 | -58.6 | Information Technology | 303.5 | |
| 7 | Alphabet | 2.1 | -30.7 | Communication Services | 1,307 | |
| 8 | Alphabet | 2.1 | -30.7 | Communication Services | 1,307 | |
| 9 | Walt Disney | 1.9 | -36.4 | Communication Services | 179.7 | |
| 10 | Meta Platforms | 1.6 | -60.8 | Communication Services | 353.5 |
Sources: Apex, IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
