Tesla had sold barely 1,000 cars when the company’s chief executive, an up-and-coming entrepreneur named Elon Musk, rang the opening bell at Nasdaq in June 2010.
The initial public offering valued Tesla at $1.7 billion even though the company’s only product was its two-seat Roadster, which had a starting price of $100,000 and took seven hours to charge. Some prominent Wall Street figures were deeply skeptical.
“Tesla is a sell, sell, sell,” Jim Cramer, the CNBC host, told viewers. “You don’t want to own this stock.”
Tesla and Mr. Musk have come a long way.
Now he is asking investors to value SpaceX, where he is also chief executive, at $1.77 trillion, or more than a thousand times what Tesla was worth in 2010. The SpaceX listing is expected to raise $75 billion for the company. Tesla’s listing raised $226 million, far less than it had received in federal government loans.
Mr. Musk is much better known than he was in 2010. As the world’s richest person, he has become a lightning rod for anti-billionaire sentiment. He owns the social media site X, which he uses to broadcast right-wing political views.
But the Tesla stock listing and its share price’s stunning rise in recent years helped create an aura of mystique around Mr. Musk. To his many admirers on Wall Street and in Silicon Valley, he is a genius who has made loyal investors insanely wealthy while disrupting the auto industry and spaceflight.
An investor who bought 1,000 Tesla shares in 2010 at the initial offering price of $17 and held the shares until now would have made a profit of more than $5.8 million. That spectacular return has enabled SpaceX’s “massive valuation,” said Michael Lenox, interim dean of the Darden School of Business at the University of Virginia.
“‘In Elon we trust,’” Mr. Lenox said, summarizing the view of Mr. Musk among his admirers. “He has created these successful businesses. That is what the market is looking at.”
Even in 2010, Mr. Musk displayed brashness and a talent for winning over investors.
Parrying criticism from Mr. Cramer, Mr. Musk reminded viewers that the Wall Street guru had also recommended buying shares in Bear Stearns before the Wall Street bank collapsed during the financial crisis. Mr. Cramer, Mr. Musk said with a smirk during an interview with CNBC, was a “contraindicator.”
“The smartest money in the world is betting on Tesla,” he told Bloomberg in another interview, without naming any investors. “They must have some reason.”
Mr. Cramer was not completely wrong. Tesla shares languished for almost a decade, trading below the offering price well into 2019. They started taking off after the company’s Model 3 began to sell in significant numbers.
Mr. Cramer later changed his mind about the fledgling carmaker, which became the largest manufacturer of electric vehicles until BYD of China overtook it last year.
“Tesla was a highly speculative company when it came public, and I was skeptical,” he said this week in a statement to The New York Times. “As the company proved it could execute and the facts changed, my view changed.”
In 2010, it was by no means certain that Tesla’s stock would be successful. Inside the company, employees were anxious, said Kurt Kelty, who was Tesla’s senior director of battery technology. “What’s going to happen with the price of the stock once it goes public?” he said they had wondered. “Are we going to tank on the first day? Are we going to take off like a rocket?”
Mateo Jaramillo, who worked on Tesla’s electronic propulsion systems at the time, said he and other workers had been too busy to spend much time celebrating. “Maybe we took an hour or two to acknowledge the event, and then it was right back to work,” he said.
Tesla employees had stock options, but at the time, those didn’t seem much more valuable than the bottles of “Roadster Red” wine they had received as a memento of the stock market listing.
“We all believed in the company, or we wouldn’t have been there,” said Mr. Jaramillo, now chief executive of Form Energy, a company that makes large energy-storage systems. “But none of us went there with the expectation that it was going to be a wealth-creating sort of endeavor.”
It was an inauspicious time for the auto industry. General Motors was emerging from bankruptcy, and Ford Motor was selling Volvo at a loss after selling Jaguar Land Rover.
There was effectively no market for electric vehicles. The Model S sedan, Tesla’s first mass-production car, would not hit the road for another two years.
“There were still a lot of questions about electric cars and whether they were viable,” said Mr. Lenox, whose research at the University of Virginia focuses on technology firms.
Mr. Musk won over investors by portraying Tesla as a Silicon Valley start-up with huge growth potential, the opposite of the plodding, century-old Detroit carmakers.
“We operate in a fundamentally different manner and structure than traditional automobile manufacturers,” Tesla’s 2010 prospectus said.
Mr. Musk is still telling shareholders that Tesla is much more than a car company. Now he argues that it will dominate the market for self-driving taxis and humanoid robots, untested technologies that are not generating much revenue. Enough investors buy that premise to give Tesla a stock market valuation of $1.4 trillion, many times the valuations of G.M. and Ford.
He has also been pitching SpaceX as more than just a rocket company or a provider of satellite internet service. It will also build orbiting data centers to power xAI, its artificial intelligence unit, and lead humanity to Mars, he has said.
SpaceX’s mission is “to build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe and to extend the light of consciousness to the stars,” the company has said in investor presentations.
Nobody can say with any certainty how SpaceX stock will perform and whether it will follow the trajectory of Tesla shares. Even executives who spent years at the automaker acknowledged that they had failed to anticipate its rise.
“Who would have known how high the stock has gone,” Mr. Kelty, now vice president in charge of batteries at G.M., said about Tesla’s shares. He added, “I wish I’d hung on to mine.”
