Tesla CEO Elon Musk recently stated that Tesla could eventually be worth more than Apple and Saudi Aramco combined. The statement came as a bit of a surprise, considering the Q3 earnings report showed the revenue target for Tesla fell under predictions.
Tesla brought in $21.45 billion for Q3, falling just shy of its anticipated $22 billion for the quarter. Musk attributed the shortfall to logistical issues that prevented the company from delivering the completed vehicles. Tesla was only able to deliver 343,830 vehicles rather than 359,000 vehicles as planned for the quarter.
“As our production volume continues to grow, it is becoming increasingly challenging to secure vehicle transportation capacity and a reasonable cost during these peak logistics weeks,” Musk explained during a third-quarter earnings call with shareholders.
Despite the under-target quarterly earnings, Musk seemed confident in his remarks.
“I can’t emphasize enough that we have excellent demand, and we expect to sell every car we can make as [far] in the future as we can see,” he said.
Earnings-per-share came in at $1.05 versus the $.99 anticipated earnings.
“Tesla’s total revenue shot up 43% year over year to $16.9 billion in the second quarter. Adjusted earnings jumped 57% year over year to $2.27 per share, driven by fatter margins,” The Motley Fool reported.
Comparatively, Apple’s year-to-year growth is not nearly as rapid. Its year-to-year quarterly earnings were only up 2% at the end of its fiscal third quarter in June of this year. Of course, Apple’s sales base is currently much greater, and with that 2% revenue increase, the company’s revenue hit $83 billion, roughly five times greater than Tesla’s.
“With a sales base that huge, even a multibillion-dollar top-line gain would translate into a small increase in percentage terms,” the Motley Fool explained.
When asked whether Tesla will become the most valuable company ever, Musk responded, “Tesla can far exceed Apple’s current market cap. I can see a potential path for Tesla to be worth more than Apple and Saudi Aramco combined. [It] doesn’t mean it will happen, or it will be easy. But for the first time, I can see a way for Tesla to be roughly twice the value of Saudi Aramco.”
Tesla’s current market cap is $690 billion, far exceeding that of Toyota, Porsche, Volkswagen, Mercedes Benz, BMW, General Motors, Ford, Ferrari, Honda, and Hyundai combined. At present, Apple still beats Tesla with a market cap of $2.3 trillion. Saudi Aramco’s market cap came in at $2.1 trillion.
Tesla’s end market is greater than Apple’s, and that’s where the very real possibility comes in that Tesla could out-earn Apple in the future. A third of all vehicles sold by 2028 will be EVs, with the proportion increasing to 54% by 2035, according to estimates by AlixPartners, a financial advisory firm.
The electric vehicle market is expected to see 29% annualized growth through the end of the decade. In contrast, the global cellphone market is expected to see an annualized increase of 7.6%.
