After entering the S&P 500 in 2020, Tesla has continued to rapidly grow. And a new report shows that the automaker could be poised to dominate the rest of the index by the end of the decade, especially with the company’s position amidst a burgeoning EV and autonomous driving industry.
Tesla may be severely undervalued, even with shares floating around $1,000 per share, according to a report written by Worm Capital researcher Cameron Tierney and partner Eric Markowitz recently reported by Fast Company. In the report, Tierney and Markowitz posit that Tesla’s competitive edge coming from advances in artificial intelligence make it a serious contender and likely to dominate the S&P 500 by 2030.
The report encapsulates a multi-year study conducted by the firm of Tesla’s various business sectors, including its cars, EV batteries, trucking, AI and more — all of which have been built up as a result of the ever-expanding EV automaker.
What it found was that Tesla has uniquely sought to control its own destiny, building and reinventing its own components, tools and factories for its needs.
The result has sparked a movement towards EVs by the auto industry at large, as the International Energy Agency reported EV sales more than doubling in 2021 to a total of 6.6 million worldwide.
Now, the agency reports that EVs represent nearly 9 percent of the global car market, tripling in its market share from just a few years earlier. By 2030, the Edison Electric Institute predicts the U.S. will see around 22 million EVs on the road, as another example of the growing field.
Above: Eric Markowitz, Worm Capital director of research, joins CNBC to discuss the company's projections for Tesla (YouTube: CNBC Television)
With Tesla so uniquely positioned amidst the industry’s infancy, Tierney and Markowitz note that the automaker is far ahead of smaller EV makers and traditional automakers alike in its technology, vertical integration of its supply chain, and its access to software and AI, as a result.
“With a concurrent expanding margin profile to accompany revenue growth, we expect net income and free cash flow growth to accelerate in the coming years,” wrote the researchers in the report.
Tierney and Markowitz expect Tesla’s growth to help the automaker achieve a compound annual growth rate of 50 percent by 2030, a position far beyond what other equities analysts holding Tesla predict.
“Conventional Wall Street analysis consistently undervalues Tesla’s multiple business lines, its massive scale, its expanding margin profile, its leading revolution in complex manufacturing, its approach to real-world AI, its vertical integration, its software stack, and much more.”
To be sure, the company’s growth has been anything but conventional, with Tesla’s unique sales model, its advanced position in EVs and AI and the continued growth of the zero-emission vehicle industry all provide a good framework for the company to succeed in years to come.