Tesla (NASDAQ: TSLA) bull Pierre Ferragu recently talked about the electric automaker’s potential valuation for the future and whether the company has the potential to become the largest in the world.
On an episode of the Tesla Daily Podcast with Rob Maurer, New Street Research’s Pierre Ferragu pondered whether Tesla could become the most valuable company in the world. Maurer’s question eluded the automotive industry exclusively and asked Ferragu if Tesla could be the biggest company in valuation, regardless of industry.
Analysts and retail investors often misconstrue Tesla’s business. While their electric cars are noted as the best globally, Tesla is not a car company explicitly. Its energy products, along with its development of software and batteries, make it much more than just a car company.
But could Tesla be bigger than Amazon or other e-commerce giants? Ferragu doesn’t think so.
“It’s difficult to say. Alibaba and Amazon still have a massive leeway in terms of growing their business. You know, when Tesla is like two or three trillion dollars, Amazon and Alibaba could be actually larger,” Ferragu said.
Because e-commerce companies are constantly expanding and offer products that everyone on Earth needs, it will be difficult for Tesla to expand its valuation to the scale that Amazon and Alibaba will. Simply put, those companies have a larger consumer base because their products are used everywhere. Cars are not a necessity for everyone like consumer goods are.
This does not mean that Tesla won’t overtake some other large companies, however.
“But I think Tesla will be larger than Apple, larger than Google, larger than Facebook, larger than Microsoft, without any doubt. But for the retail guys: Who knows.”
The only real industry that could be as large as e-commerce, according to Ferragu, is real estate. But even still, Tesla is hitting two markets that are in high demand, so the ceiling is limitless.
“Tesla is energy plus transportation. It’s a damn lot,” Ferragu said.
Ferragu holds a $578 price target for TSLA stock with a “Buy” rating. He holds a 62% success rate with an average return of 5.4%, according to TipRanks.com.
At the time of writing, TSLA stock was trading at $438.40.
Disclaimer: Joey Klender is a TSLA Shareholder.