With a $1.4T Market Cap, Exactly How Overvalued Is Elon Musk’s Tesla?

Elon Musk’s unwavering support for President-elect Donald Trump has paid off handsomely for his web of tech ventures. The CEO of Tesla (TSLA), SpaceX, and a handful of other companies has seen his fortune skyrocket 83.4 percent to nearly $500 billion since Trump’s election win in November, making him the first person to ever achieve this status.

Tesla, Musk’s only publicly traded company, has seen its stock price gain nearly 90.8 percent since the election to around $480 a share, reflecting investor sentiments that its CEO’s newly-minted alliance with the president-elect will be fruitful for the EV maker, which is now worth over $1.4 trillion.

Wedbush Securities’ Dan Ives expects Tesla to face less regulatory pressure on innovations like autonomous driving technology. “We fully expect under a Trump White House these key initiatives will now get fast-tracked,” Ives wrote in a Nov. 29 note to clients. Ives raised his price target for Tesla stock to $515 from $400 for the next year.

Ives is not alone; 25 of the 57 analysts surveyed by FactSet are bullish on Tesla. This is despite Tesla’s price-to-earnings ratio of 125, the highest of any major tech companies and more than double Nvidia’s 51.71. The average price-to-earnings ratio of S&P 500 companies is 27.87.

Morningstar classified Tesla as “overvalued” on Nov. 15, pointing to the post-election rally as the main reason. Stifel Group’s Stephen Gengaro labels Tesla as “significantly overvalued” but still holds a “buy” rating for the stock. Gengaro’s analysis posits that, while Tesla might be overvalued as a car company, its stock price may be justified by ambitious projects like its FSD (full self-driving) software and the newly announced robotaxi service. Tesla is “clearly not just an automaker,” Gengaro said in a Dec. 1 note to clients.

The bump in Musk’s wealth also came from SpaceX’s recent round of share buy-backs that gave the privately held rocket and satellite maker a valuation of $350 billion, making it the world’s most valuable private company. Share buy-backs often signal confidence in a company’s financial health and future prospects while providing liquidity to early investors and employees. SpaceX conducts secondary rounds roughly twice a year, allowing employees and other shareholders the opportunity to sell their stock.

Musk’s wealth is largely split between Tesla and SpaceX. He owns about 13 percent of Tesla, as per a 2024 proxy statement, a stake now valued at $195 billion, and roughly 42 percent of SpaceX, a stake worth $147 billion. In addition, Musk owns X, xAI, The Boring Company, and Neuralink, which are collectively worth about $78 billion.

Notably, Bloomberg’s calculation of Elon Musk’s net worth still includes a 2018 Tesla pay package that promised to award him $56 billion worth of stock options pending a series of performance targets. The pay package was voided for a second time earlier this month by Delaware judge Kathaleen McCormick. McCormick first voided the pay package in January, arguing that Musk might have exerted too much influence on the creation of the compensation package. Tesla’s board of directors brought the package back to a shareholder vote in June, where it was overwhelmingly approved. Tesla said it plans to appeal the judge’s second overruling.