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Analysts predict that if Google decides to put its cash reserves in use, it can potentially pay Tesla a 100% premium to its current price for a complete acquisition. This will value the Tesla (TSLA) stock at a price of $1500 per share and its valuations shooting to $280 billion.
Tesla has emerged as the top-performing stock on Wall Street so far in 2020. With nearly 100% gains year-to-date, the Tesla (TSLA) stock is emerging as the darling of investors. With strong Q4 2019 numbers, the company has sidelined the critics as analysts are now betting on its strong future.
Well, the latest buzz in the market is about tech giant Google acquiring Tesla, a merger which can potentially create a storm in the coming decade. Last month in January 2020, Google Inc. attained its trillion-dollar valuations joining the ranks of Apple and Microsoft.
With the recent price boom for the Tesla stock, the company valuations have soared to $140 billion. Thus, with this, Tesla’s total valuation is more than the combined valuations of Ford, General Motors, and Chrysler. Besides, Tesla has also got the technological prowess combined with the electric car infrastructure which can take the company miles ahead of its rivals.
As reported by Trefis Forecast, a deal between Tesla and Google can take the automotive giant’s valuations to $1.5 trillion. The report breaks down all the practical scenarios which can make Tesla a 1.5-trillion-dollar company over the next decade. It clearly means that Tesla will be 10x its value it is today.
So let us see the possible best scenario’s if Google puts its cash to use in acquiring Tesla for $250 billion.
Tesla and Google: Merger Made in Heaven
Having established its strong foothold in the tech space, Google is exploring more avenues to grow its business. The electric car industry is growing rapidly and could be a game-changer for the global economy over the next decade.
Thus, Google can share its software prowess with the expertise of Tesla in making electric cars. This could potentially be an excellent match for making the next-generation self-driving cars.
By the end of 2020, Tesla has assured delivering 500K car units to its customers. This indicates Tesla’s growing manufacturing strength. The report states that with this growth rate, Tesla deliveries could rise to 2.7 million units by 2025 and over 8 million units by 2030 thus competing with giants like Toyota and Volkswagon. However, to achieve this milestone, Tesla needs to bring more affordable models in the mass market.
Tesla holds a formidable record of scaling its production from 2K units in 2012 to over 367k units by 2019. Besides, targetting the global markets, Tesla built its Shanghai gigafactory in record 10 months.
Apart from its electric-car technology, Tesla also holds an edge over its rivals for developing robust software for autonomous driving technology. The self-driving car industry is likely to explode over the next decade. This being a data-driven industry, the merger of Tesla and Google and unearth whole new possibilities for the market.
Currently, Google’s valuations stand above $1 trillion with over $120 billion cash in hand and free cash flow of $20 billion a year. If at all, Google pays a 100% premium on the current Tesla valuations, this would put the Tesla (TSLA) stock to $1500 per share and $280 billion market valuation.
Well, we have yet to hear anything from either of these two giants. But a merger of these ranks can trigger the beginning of a new conglomerate for the next decade.