Al Root

Self-described "long-term optimist" Elon Musk made another bold prediction about his car company. That isn't necessarily good news for Tesla's stock price.

On Saturday, Musk tweeted that Tesla's earnings could grow tenfold over the coming five years if its business execution is "outstanding."

Following the prediction, Tesla stock was up 1.5% in premarket trading at $297.28, while S&P 500 and Dow Jones Industrial Average futures were up 0.1% and falling less than 0.1%, respectively.

Musk's tweet implies earnings per share of about $25, or roughly three times what Wall Street currently projects. Future Fund Active ETF co-founder Gary Black said that implies Tesla stock could be worth $700 right now, adding "that's Elon's [earnings] assumption, not ours."

It isn't Musk's first big prediction. It probably won't be his last. Barron's found 10 times in the recent past that Musk has made a bold prediction about Tesla's valuation.

The first we found happened in July 2021 when he said developing self-driving cars could be "one of the most valuable things that is ever done in the history of civilization." In October 2022, he suggested Tesla could be worth more than Apple and Saudi Aramco combined.

The pace of predictions seems to have picked up. In June 2024, he suggested Tesla could be 10 times more valuable than the second most valuable company. In July, he said AI-trained robots could be worth " several times" a suggested $5 trillion valuation for self-driving cars.

A few weeks ago, on Tesla's fourth-quarter conference call, Musk said Tesla could eventually be worth more than the next five companies combined.

Tesla stock fell seven times the day following the prediction. Most of the predictions followed an earnings report. Two were made outside of earnings, at Tesla's annual shareholder meetings. The stock dropped both times in those instances.

The average move, up or down, was about 9%. The magnitude of the move, however, was likely due to a post-earnings reaction.

It will be interesting to see how Tesla stock reacts Monday. Shares fell almost 30% in February as January sales data fed fears that Musk's political activities were hurting the company. Tesla's sales fell year over year in the U.S., Europe, and China.

Musk has always been controversial, but he's generated long-term gains -- and volatility -- for investors. Tesla stock was about $220 a share after the 2021 prediction. Shares traded above $400 in 2022. Shares closed February at just under $293, but they traded above $480 in December.

Write to Al Root at allen.root@dowjones.com

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March 03, 2025 04:31 ET (09:31 GMT)

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