Tesla Stock Price Reaches New Heights: Can It Justify the Valuation?

Tesla's stock price has skyrocketed to 140 times its expected earnings of $2.23 per share, making it one of the most expensive stocks on the market.

This valuation is comparable to Amazon and Cisco in the past, which were priced high due to their potential for strong future growth.

However, not all companies with high valuations succeed, as seen in Groupon, GoPro, and Blue Apron. So what must Tesla do to justify its stock price?

Tesla needs to lead the electric vehicle market, which currently has a global EV sales penetration of 20 million cars, or one out of every four cars purchased in 2025.

The company also relies on full self-driving features, with only 1.5 million owners paying $99 per month for this service, despite CEO Elon Musk's goal of 10 million subscribers.