Tesla Stock Peaks, Musk Gains $37 Billion This Month

Tesla’s stock soared to a new 2024 high on Tuesday, continuing the company’s impressive July performance and widening the gap between CEO Elon Musk and the world’s next richest individual. Despite the surge, Tesla may still face challenges in justifying its stock rally. Tesla’s share price climbed as much as 4.8% to $264.98, its highest since December 28. It closed slightly lower at $262, marking its highest closing price since last October. This rally extended Tesla’s streak to ten consecutive trading sessions in the green, its longest since a 13-day run from May 25, 2023, to June 13, 2023. During this winning streak, Tesla’s stock has gained approximately 44%.

In July alone, Tesla’s stock has risen 33%, increasing its market value from $631 billion to $822 billion. This growth is 18 percentage points higher than the next-best S&P 500 constituent in July, glassmaker Corning, whose shares have risen 15%. The broader market was relatively quiet on Tuesday, with the tech-heavy Nasdaq index up a modest 0.1%. Tesla stood out as the biggest gainer among S&P stocks valued at over $50 billion, according to FactSet data.

Elon Musk’s net worth is estimated at $258.5 billion, with a $6 billion increase from Tesla’s stock rally on Tuesday alone. Musk, who owns 13% of Tesla shares, is now $37.1 billion richer than at the end of June, extending his lead over Amazon founder Jeff Bezos by more than $40 billion.

Positive catalysts driving investor momentum into Tesla stock include a recent vote to reinstate a historic pay package for Musk, which is expected to keep him engaged with the company. Additionally, Tesla announced last week that it delivered more vehicles in the second quarter than analysts had forecasted. Despite a 20% decline in the first half of 2024, Tesla’s stock is now up 6% year-to-date, even after reporting a nearly 50% annual decline in first-quarter profits. However, Tesla’s stock performance still lags behind the S&P’s 18% gain this year and remains about 40% below its 2021 all-time high.

“Is Tesla getting its mojo back?” asked Morgan Stanley analyst Adam Jonas in a note to clients last week.

With a more than 50% rally over the last month without significant updates to its financials, Tesla’s stock is becoming increasingly expensive for prospective investors. Tesla’s forward price-to-earnings (P/E) ratio, a key valuation metric, shows the stock at its most expensive level in years. The share price was 92 times higher on Tuesday than its projected profit per share over the next year, nearly double its P/E ratio from three months ago and the highest since April 2022. Tesla’s P/E is more than twice as high as that of high-growth artificial intelligence company Nvidia, suggesting that Tesla needs substantial long-term earnings growth to justify its valuation. Wall Street analysts expect a significant downturn in Tesla’s financial performance, with consensus estimates predicting a 23% decline in 2024 earnings compared to last year and annual earnings not exceeding 2022’s record until 2026.