Elon Musk Sees SpaceX Stock Rising to Crazy Levels. He Once Made Similar Predictions for TSLA Too

Valuing Elon Musk-run companies has always been a conundrum given the supposed “Musk premium.” For instance, Tesla's (TSLA) market cap is around $1.5 trillion, more than the combined market cap of all leading legacy automakers. To be fair, Tesla is not a pure-play automaker and has significant tech capabilities. Still, many find it difficult to digest the stock's forward price-to-earnings (P/E) multiple of over 450x.

But then, Tesla has never been about short-term earnings and has been a play on what the company can achieve in the long run. SpaceX (SPCX), which listed earlier this year, is no different. Many find it grossly overvalued at an over $2 trillion market cap and an even more ludicrous P/E than Tesla, but ARK Invest's Cathie Wood—arguably among the most, if not the most, bullish observers on Musk-led names—believes the company’s IPO valuation of around $1.75 trillion would look like a “deep value opportunity” in hindsight.

Musk Believes SpaceX Could Be More Than Global GDP

Musk—who has a high propensity to make bold predictions, many (or perhaps all) of which never come to fruition—has now made an astonishing valuation call on SpaceX. In a post on X, the world’s richest person wrote: “This will sound super crazy, but I see a path to SpaceX being worth orders of magnitude more than the current Earth economy.” For context, according to World Bank data, global GDP was over $118 trillion last year, which is roughly 54 times SpaceX’s current market cap.

Incidentally, both Musk and Wood have previously made crazy forecasts about Tesla. In 2023, Wood projected Tesla would reach $2,000 in 2027 in her base case scenario, while the bear-case and bull-case scenarios were $1,400 and $2,500, respectively. Next year, ARK Invest extended the timeline to 2029 while raising the base-case target price to $2,600, with a bear-case and bull-case target of $2,000 and $3,100, respectively. 

Her forecasts are not much different from Musk's, who argued during the Q3 2022 earnings call in October 2022 that the company’s market cap could one day surpass the combined market cap of Apple (AAPL) and Saudi Aramco. Back then, the combined market cap of these two giants was in the ballpark of $4 trillion, which has since risen to around $6.5 trillion. Later, at Tesla’s shareholder meeting in 2024, Musk said that the company’s Optimus humanoid could add $25 trillion to its market cap. 

Musk's Predictions Rarely Come True

Meanwhile, Tesla and Musk aren’t a shining example of meeting projections and have actually been “overpromising and underdelivering” for years. Moreover, the goalposts keep getting shifted, moved forward, or the target simply given up. For instance, Tesla has officially withdrawn the 20 million vehicle production guidance Musk said it would hit by 2030 and has virtually given up on the 50% annual delivery growth guidance. 

Musk predicted a million robotaxis by 2020 but six years later only a tiny fraction of these are running on roads. We aren’t even talking about those full-autonomy predictions “by the end of the year,” that the billionaire made for several consecutive years. Musk has made ambitious forecasts about Tesla’s Energy business, and in 2019 he said that it might one day become bigger than the Automotive business. However, he later clarified during the Q1 2023 earnings call that the forecast implied Energy would be bigger in terms of the “total gigawatt hours deployed,” even as Automotive revenues might be higher. As for valuation, Optimus is being touted as a bigger valuation driver than autonomous driving, which Musk previously said accounted for the bulk of the company's valuation.

Meanwhile, if SpaceX and Tesla merge, which I see as a matter of when, not if, the bullish forecasts about the latter would be buried, and focus would shift to the combined entity. No wonder Musk has stopped making bullish predictions about Tesla and instead shifted attention to SpaceX, where he has a much bigger stake. As for SpaceX becoming more valuable than the world economy, I would take Musk's bullishness with much more than a pinch of salt, given how his previous forecasts have fared.

On the date of publication, Mohit Oberoi had a position in: TSLA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.