October 25, 2020

Billionaire Chamath Palihapitiya says Tesla is still undervalued as people continue to misunderstand its fundamentally disruptive technology

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FILE PHOTO: Chamath Palihapitiya, Founder and CEO of Social Capital, presents during the 2018 Sohn Investment Conference in New York City, U.S., April 23, 2018. REUTERS/Brendan McDermid/File Photo
FILE PHOTO: Chamath Palihapitiya, Founder and CEO of Social Capital, presents during the 2018 Sohn Investment Conference in New York

  • Billionaire investor Chamath Palihapitiya said Tesla is “generally misvalued” as people misunderstand its business model and “fundamentally disruptive” technology. 
  • The Social Capital CEO said Tesla is “no longer about the car business” but about fundamentally disrupting utilities and providing individuals with “the ability to be energy independent.” 
  • Shares of Tesla are up over 400% year-to-date. 

Billionaire venture capitalist Chamath Palihapitiya told CNBC on Tuesday that Tesla is still undervalued as people continue to misunderstand its “fundamentally disruptive” technology and business model.

“Tesla continues to be underestimated. I think it is generally misvalued and I think the people that are trying to compete with them are not the people they are competing with,” the Social Capital CEO said. 

Shares of Tesla are up over 400% year-to-date. The electric vehicle company also has a market capitalization larger than the “big 3 automobile” companies – GM, Ford, and Fiat Chrysler – combined and multiplied by three. But Palihapitiya said Tesla is “no longer about the car business.”

“The value of this business is about deregulating energy. That’s about batteries and battery storage and it’s about disrupting utilities,” he said. “It is about the combination of hardware and software that will give all of us individuals the ability to be energy independent and I think that is a fundamentally disruptive thing.”

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While many investors were disappointed at Tesla’s battery day, Palihapitiya said that he thought the “complete opposite.” The investor said Tesla didn’t just show a legitimate path for selling cars, but demonstrated that the “disruption of utilities”  is now within two to three years away.

He added: “I’m an investor and an owner of rare earths that feed this supply chain of electrification. What I can tell you is that it was a meaningful leap in innovation that these guys presented.”

The billionaire also said Tesla is “going to be one of the most valuable companies in the world.”

It’s already the 12th most valuable company in the world by market capitalization.