Tesla Stock Split and Future Valuation: Market Cap and Share Price Trends

Tesla's upcoming stock split on 31st August promises to change the dynamics of its stock price. This article explores the potential impacts, including the possibility of Tesla achieving a market cap of $2 trillion, and how this might affect its share price.

Volatility and Market Predictions

When discussing the prospects of a stock, especially one as volatile as Tesla, there is a lot of uncertainty. The market is inherently unpredictable, making it challenging to say with certainty what might happen. However, if Tesla were to reach a price of $2000 per share following the stock split, it would indeed be a windfall for investors. This scenario would make Tesla the largest company by market capitalization, a feat currently only achieved by a handful of tech giants worldwide. But the probability of this happening is highly debatable.

Market Cap and Analyst Opinions

Elevating Tesla's market capitalization to over $2 trillion is a fantasy given the current financial realities. Only two out of fifty main analysts—Dan Ives from JMP Securities and ARK Investments—believe Tesla has the potential to appreciate further. Both of these analysts are deeply invested in Tesla succeeding, and their track record suggests they may be overly optimistic. This investment bias raises questions about the objectivity of their price targets.

Looking at the broader picture, the likelihood of Tesla going bankrupt is much higher than becoming a 2 trillion dollar company. For Tesla to become a 2 trillion dollar company, it would need to achieve a market cap of approximately $1.75 trillion. Achieving this level of valuation would be a monumental task, considering that even tech behemoths like Apple recently achieved this only through extensive profits and value creation. Tesla, currently operating without substantial profits beyond tax credits, faces significant hurdles in this aspiration.

Current Stock Trends and Future Prospects

To understand why a $2000 share price for Tesla is improbable in the short term, we need to look at the current stock trends. With Tesla stocks in one of the strongest upward trends in the market, the probability of price increases is higher than decreases. However, even with this strong uptrend, the chances of reaching $2000 per share are minimal.

John Doe, an investment analyst with significant knowledge of Tesla, notes that the likelihood of Tesla stock reaching $2000 in the near term is highly unlikely, especially considering the current economic climate, including the ongoing impact of COVID-19 and the looming recession. Long-term, while there is a possibility, it is not expected to happen soon.

Impact of Stock Split and Market Cap

Tesla is set to perform a 5-for-1 stock split, which will keep its market cap around $350 billion, but the share price will be divided by five. For Tesla to return to a $2000 share price, it would need to achieve a market capitalization of $1.75 trillion. This scenario is highly improbable given the current economic and financial standing of Tesla.

While it is possible for Tesla to reach a $1 trillion market cap, analysts like John Doe suggest that this is more likely to happen over a longer period, considering the current economic conditions. With the ongoing challenges of the global pandemic and the looming recession, achieving such high valuations in the short term is unfeasible.

Conclusion

In conclusion, while the stock split on 31st August will have a significant impact on Tesla's share price, the probability of achieving a $2000 share price in the short term is extremely low. It is more realistic for Tesla to focus on growing its revenues and profits to sustain a $1 trillion market cap, if it can. The market cap and share price trends suggest that long-term projections are the most plausible outcome.