Written by Norman Isaac Mwambazi

After Tesla, who will be the next $1 trillion company?

On Monday, October 25, 2021, automaker Tesla Inc. (ticker: TSLA) crossed the $1 trillion in market capitalization after its shares …

On Monday, October 25, 2021, automaker Tesla Inc. (ticker: TSLA) crossed the $1 trillion in market capitalization after its shares soared to an all-time high, thanks to a combination of factors. By doing that, Tesla became the fifth company to be valued at worth more than a trillion dollars- a feat that was first achieved by tech giant Apple Inc. (ticker: AAPL) in August 2018. Since then, other tech titans Amazon.com Inc. (ticker: AMZN), Alphabet Inc. (ticker: GOOG, GOOGL), and Microsoft Corp. (ticker: MSFT) have all crossed the trillion-dollar mark in market capitalization. In July this year, social media giant Facebook Inc. (ticker: FB) joined the trillion-dollar club, but it fell out in September.

However, analysts believe that after Tesla joins the trillion-dollar club, Facebook will achieve the feat again, in 12 months or less, making it the sixth company to be valued at more than $1 trillion.

Facebook released a better than expected earnings report for the third quarter of its 2021 fiscal year after the closing bell on Monday which sent its stock higher in the extended trading session to close at $337 a share. Currently, Facebook opened today’s premarket trading session 0.5% higher than yesterday’s close, and it is currently trading at $312.22 a share. The company has a market capitalization of $880.29 billion, according to data from Google Finance.

Facebook’s stock is up 16.09% so far this year, and in this period, it peaked on September 5, 2021, when it closed the normal trading session at $378. So analysts who focus on the S&P 500 Index (SPX) components believe it is only a matter of time until the company returns to the rarefied trillion-dollar club.

Facebook would not have fallen out of the trillion-dollar club in September had it not been for the whistle-blower allegations of the company prioritizing profit over user safety, privacy, and mental health. The worldwide six-hour outage of its entire suite of services (WhatsApp, Messenger, Instagram), as well as the effect of data limits that Apple rolled out through its iOS platform in June and July. Last week, Snap Inc. (ticker: SNAP) released its lower than expected Q3 FY2021 earnings report in which it blamed Apple’s changes for its dull performance in the quarter, and these changes seem to have extended to other social media companies whose main revenue stream is digital ads on their platforms.

However, Wall Street is still bullish about Facebook’s future, and market data from S&P Global Market Intelligence and stock research firm MarketSmith shows that Facebook’s stock will gain another 27% from Monday’s close to $416.43 in the next 12 months. If this prediction comes to pass, it will take Facebook’s market capitalization to more than $1.17 trillion, surpassing Tesla’s current market cap of $1.03 trillion.

Speaking of Tesla, although it is currently enjoying a winning streak amidst computer chip shortages that have affected the auto industry, analysts are bearish about its stock performance in the next 12 months. They are predicting that its stock could fall from its current price of $1,037.86 to as low as $787.15, which represents a plummet of 23%. If this happens, Tesla will fall out of the trillion-dollar club because its market capitalization would be just $779.3 billion. It is worth noting that although data back these projections, they are just that: projections.

So, who will be next after Facebook?

Now that analysts are convinced Facebook’s rally to the trillion-dollar market cap is almost inevitable, the question lingers! Whose market cap will surpass the trillion-dollar mark next? The quick answer is no one soon, and here is why.

There are candidates whose market capitalization is about half a trillion dollars or more, but analysts believe these still have a long way to make a trillion dollars in market value, mostly because they are not fast growers.

One of these is investment guru Warren Buffet’s Berkshire Hathaway (ticker: BRKA). This American multinational conglomerate holding company has a market capitalization of $651.74 billion. The company has gained 26.06% year to date and 43.52$ year over year, but analysts expect its profits per share to rise 6.9% in 2022, which will take its market capitalization to $730.8 billion in the next 12 months. Berkshire Hathaway’s top five holdings are Apple, Bank of America (ticker: BAC), Coca-Cola (ticker: KO), American Express (ticker: AXP), and Kraft Heinz (ticker: KHC), with Apple taking the most significant share of the company’s portfolio with 49.1%.

Another company peeping over the $1 trillion market cap is payments processing firm Visa Inc. (ticker: V), but it is from a distance. Visa currently has a market capitalization of $466.60 billion, and its stock has gained 21.25% in the last 12 months. Analysts expect Visa’s profits per share to rise 25% in 2022, and its stock is seen gaining just 0.9 in the next 12 months, and with this “slow”, the company would not make a trillion dollars in market value soon. 

Using data from Investment Business Daily (IBD), S&P 500 Global Market Intelligence, and MarketSmith, analysts have compiled a list of 10 companies, all S&P 500 Index components, projected to be the largest by market capitalization in the next 12 months. The tech sector dominates this list, but the financial sector is also represented by companies like Visa and investment and financial services firm JPMorgan Chase and Co. (ticker: JPM)

Current and projected market values

CompanyTickerStock YTD % ch.Market value now ($ trillions)Analysts’ 12-month market value targetSector
Apple(AAPL)12.0%$2.5$2.7Information Technology
Microsoft(MSFT)38.5%$2.3$2.5Information Technology
Alphabet(GOOGL)56.8%$1.8$2.2Communication Services
Amazon.com(AMZN)1.9%$1.7$2.1Consumer Discretionary
Facebook(FB)20.3%$0.9$1.2Communication Services
Tesla(TSLA)45.2%$1.0$0.8Consumer Discretionary
Berkshire Hathaway(BRKA)25.5%$0.7$0.7Financials
Visa(V)6.9%$0.6$0.6Information Technology
Nvidia(NVDA)77.4%$0.6$0.6Information Technology
JPMorgan Chase(JPM)34.5%$0.5$0.5Financials
 Sources: IBD, S&P Global Market Intelligence.

Feature image by Saddock Wealth