Bet you wish you held shares in Tesla. Or if you do (as most of our readers will, via their holding in the Scottish Mortgage investment trust), I bet you wish you held more shares in Tesla. They have risen fourfold this year and an extraordinary 80-fold since listing ten years ago. Believers in Tesla’s potential have made fortunes. Non-believers still think the whole thing is nuts. But nuts or not, it might go higher. Chris Andrew of Clarmond compares the firm to JDS Uniphase, a “semiconductor optical visionary” stock wildly popular in 1999. It rose five times in the year it joined the S&P 500 (as it is rumoured Tesla will this year) and 100 times in the decade leading up to its joining, as everyone jostled to get a piece of what they were convinced was “unique technology”. At its peak, JDSU’s market value soared to 20% of that of the largest listed company of the time (Microsoft).
Today Microsoft is number two. Apple is number one. Were Tesla to be worth 20% of Apple, its share price would go from around $1,500 now to $1,900 – a number pretty close to that forecast by “the most bullish Wall Street analysts”. There might be new names here, says Andrew. But this is an “old script”. One about a “once-in-a-lifetime tech company with a cult following being hysterically cheer-led by the Street and added to the key mainstream index on bizarre valuations at the same time as the central bank is flooding the markets with liquidity”.
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