Prediction: 3 stocks that could be worth more than Tesla by 2040
Under S&P500 Components, few (if any) have had a better run over the past decade than electric vehicle (EV) manufacturers. Tesla (TSLA 6.24%). By the This article looks at three stocks that could be worth more than Tesla by 2040, including Mastercard, Facebook Messenger, WhatsApp and Instagram. It also predicts that Mastercard will become the second largest payment processor to overtake Tesla over the next 17 years. This article also looks at the growing competition in the electric vehicle space, as well as the potential for a global recession and a slow corporate spending slowdown.
ที่ตีพิมพ์ : 2 ปีที่แล้ว โดย Kerry Williams ใน Finance Auto
Under S&P500 Components, few (if any) have had a better run over the past decade than electric vehicle (EV) manufacturers. Tesla (TSLA 6.24%). By the closing bell on March 30, 2023, Tesla stock had returned more than 7,600% over the past decade.
This amazing outperformance reflects Tesla’s first-mover advantages in the EV space. It is the first automaker in more than half a century to successfully progress from scratch to mass production. Last year, Tesla produced 1.37 million electric vehicles and has a goal of reaching 1.8 million electric vehicles in 2023, thanks largely to ramping up manufacturing activity at gigafactories in Berlin, Germany, and Austin, Texas, both scheduled for completion in 2022 operation went.
Tesla’s profitability has also played a key role in boosting its market cap to $624 billion (and over $1 trillion at times). Based on generally accepted accounting principles (GAAP), Tesla has been profitable for each of the last three years.
By 2040, these could be some of the largest companies in the world
But if there’s one constant when it comes to the world’s largest publicly traded companies, it’s that they’re constantly shuffled up and down the list. If history is any guide, today’s largest companies will likely be replaced in 10 to 20 years.
Between the rapidly increasing competition in the electric vehicle space, Tesla struggling to become more than just a car company, and Elon Musk adding a host of extra risks by failing to deliver on a laundry list of promises, it’s entirely possible that Tesla being overtaken by other companies (in terms of market capitalization) in the future.
While no one knows exactly what the future holds, here’s my prediction of three stocks that could be worth more than Tesla by 2040.
Based on companies currently trailing Tesla in market cap, social media stocks are the most likely to outperform them meta platforms (META 1.97%). Meta is the parent company of Facebook, the world’s most popular social media site.
Meta was not without its problems. Fears of a US or global recession weighed on the stock over the past year. With more than 97% of annual sales coming from advertising, a recession is definitely a near-term concern for its top line and bottom line.
Additionally, CEO Mark Zuckerberg has spent aggressively on a variety of Metaverse initiatives. While Metaverse is unlikely to be a significant revenue or growth driver for years to come, losses from Meta’s Reality Labs operating segment have skyrocketed. That’s not looking good for Meta as investors worry about a bear market and a possible U.S. recession.
However, these are very short-term concerns that do not impact Meta’s clear competitive advantages. For example, Facebook, Facebook Messenger, WhatsApp and Instagram are still among the four most downloaded social media apps in the world. In the fourth quarter, Meta’s family of apps attracted 3.74 billion unique monthly active users. With more than half of the world’s adult population visiting a meta-owned property each month, it’s pretty clear that the company has strong power over ad pricing in most cases.
Meta’s incredible cash flow and balance sheet also give him the ability to take risks and invest in things like the metaverse. The company ended 2022 with $30.8 billion in net cash, cash equivalents and marketable securities. Additionally, it generated $42.7 billion in operating revenue from its family of apps. While the Metaverse only partially lives up to its hype, Meta, with its hardware and infrastructure, will be well positioned to be a gateway into the virtual world.
If everything went well: Mastercard
A second stock that has a reasonable chance of overtaking Tesla over the next 17 years is the payment processor MasterCard (MA 1.16%). Just keep in mind that Mastercard would probably need a few things for this to happen.
The biggest problem (if you want to call it that) for Mastercard is that it’s a cyclical company. Financial stocks tend to ebb and flow with the US and world economy. Should a recession develop in the US, it would not be a surprise to see consumer and corporate spending slow.
Another concern for Mastercard — and where the company would need to get things right — is how cryptocurrencies and blockchain technology fit into the grand scheme of things. If blockchain continues to be more hype than reality in the payments space, Mastercard’s leadership as a global payments processor should be assured.
Mastercard has a clear path to steady domestic growth. In 2021, filings with the Securities and Exchange Commission showed that the company held nearly 24% of the market share in credit card network purchase volume in the United States (the world’s leading consumer market).
But a significant portion of Mastercard’s long-term growth opportunity will come from emerging/developing markets. With more than half of the world’s transactions still being settled in cash, Mastercard has plenty of room to expand organically or through acquisitions into underbanked regions like the Middle East, Africa, and Southeast Asia.
Investors should also note that Mastercard has largely de-risked its operating model by avoiding lending. Lending institutions typically face mounting delinquencies and loan losses during recessions. Because Mastercard isn’t a lender, it doesn’t have to set aside capital to cover loan losses. This allows Mastercard to recover from recessions faster than most financial stocks.
The third stock that could be worth more than Tesla by 2040, but has outperformed the longest given its current market cap, is fintech stocks PayPal Holdings (PYPL 2.08%). PayPal’s $86 billion market cap would need to grow more than 625% to surpass Tesla (at its current valuation).
Though the growing likelihood of a U.S. recession is one reason PayPal stock is down 75% from its all-time high in 2021, inflation has been the bigger concern. With inflation well above its historical average, the purchasing power of low-income earners has diminished. PayPal’s digital platforms are usage-based, which means reduced user purchasing power could result in fewer transactions.
But despite these short-term concerns, PayPal’s key performance metrics continue to move in the right direction. Even as net new account growth slows, PayPal’s total payment volume (TPV) grew by a double-digit percentage excluding currency fluctuations to $1.36 trillion in 2022. When the US economy is in full swing, that’s for the TPV of PayPal not unusual to increase by 20% annually.
Even more important to PayPal is the engagement of its active users. At the end of 2020, PayPal’s active users had completed an average of 40.1 transactions in the last 12 months (TTM). At the end of 2022, there were up to 51.4 transactions via the TTM. More transactions being completed on PayPal and Venmo is the easiest way for the company to increase its gross profit.
In addition to innovations in the fintech area, the management also pays attention to costs and acts correctly towards its shareholders. CEO Dan Schulman, who will retire later this year, announced at least $1.3 billion in cost savings for 2023 and launched a $15 billion share buyback program last year.
With digital payments still in its infancy and PayPal leading the way, there’s a reasonable chance it will be worth more than Tesla by 2040.
หัวข้อ: Markets, Tesla