Comment by sacred_numbers

The potential upside for Tesla is huge. If they can become the Apple of electric cars and if electric cars become standard, they could be worth trillions. The reason their valuation was not in the trillions is because there is a risk that they will go bankrupt, that other companies will take the lead in EVs, or that EVs will not be where the market is headed in the foreseeable future. The reason for the jump in valuation is that those risks are being steadily reduced. EV competition is scarce, Tesla's cash reserves and consistent free cash flow hugely reduce the risk of bankruptcy, and the market is continuing to demonstrate that it wants electric cars (at least Tesla electric cars, that is), even during a pandemic. There is certainly an element of speculation and retail investor FOMO, but if Tesla's institutional investors didn't think this valuation could be justified at all they probably would have sold by now. Time will tell how reasonable the valuation really is, but betting against Tesla has not worked out very well so far.