Elon Musk raised eyebrows on the Tesla earnings call Wednesday night by claiming the electric car maker was on track to become one of the most valuable companies in the world.
"A couple years ago when the stock was at $200 … you outlined a scenario where you could get to $700 billion in market cap. That's about where Apple was at the time. We're two years later, you're obviously close to the Model 3 launch, how are you looking at that?" Barclays analyst Brian Johnson asked on Tesla's first-quarter conference call Wednesday, according to a FactSet transcript.
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In response, the Tesla founder and CEO said he believes it can reach that valuation because of pioneering development in robots, software and artificial intelligence:
"Well, now I may want to preface this by of course I could be completely delusional, but I think I see a clear path to that outcome. … The set of steps necessary to achieve that outcome seems pretty obvious. I am heavily involved in Tesla [getting] incredibly good at the machine that builds the machine, which involves, by the way, a tremendous amount of software. This is not just a bunch of robots that are sitting there. It's the programming of robots and how they interact. And it's far more complex than the software in the car. I mean, I think, this is just going to be a very difficult thing for other manufacturers to copy. I would not know what to do if I were in their position."
Tesla's market value is $51 billion through Wednesday, according to FactSet. Apple's current market value is $772 billion after a 27 percent rally this year.
Many investors and auto industry experts are perplexed with Tesla's worth, which is just below General Motors' market value. The electric car maker had a loss of $675 million last year compared with GM's $9.4 billion in earnings.
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AutoNation CEO Mike Jackson said in April he finds Tesla's valuation "inexplicable" and it was "either one of the great Ponzi schemes of all time or it's gonna work out."
Hedge fund manager David Einhorn on Wednesday said "investors remain hypnotized" by Musk and so they are ignoring a clear bubble.
"We're skeptical that the company will be able to mass market its Model 3 at volumes and margins that justify the current valuation. The enthusiasm for Tesla and other bubble basket stocks is reminiscent of the March 2000 dot-com bubble," Einhorn said on the Greenlight Capital Re first-quarter conference call Wednesday, according to a FactSet transcript. "While we don't know exactly when the bubble will pop, it eventually will."
However, Tesla advocates still believe in the company's technological lead and prowess and even hint that the carmaker would one day work with Apple.
Morgan Stanley's Adam Jonas, who has some of the most aggressive predictions on Tesla's future ambitions, asked on the conference call if Apple has anything to offer Tesla's mission to "accelerate the transition to shared autonomy and sustainable transport."
Musk said: "Yeah, I don't think they want to have that conversation, Adam. At least I've not heard any indication that they do. Obviously Apple continues to make some great products and, yeah, I mean, I use their phone and their laptop, it's cool."
If Tesla is going to one day be as big or bigger than Apple, Musk plans to stick around to see it happen on his watch.
"I intend to be actively involved with Tesla for the rest of my life," he said on the call. "Hopefully stopping before I get senile or too crazy, I don't know."
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