Hey! Tesla (TSLA 0.79%) sold more than twice as many cars in 2018 as it did in 2017! Better yet, it managed to post a quarterly profit in Q3, and may be on track to do the same in Q4!

In spite of all this, the stock's price has bounced around a lot, starting 2019 at almost the exact same level as a year earlier. Could this be a case of being able to buy this year's stock at last year's prices? More importantly, could Tesla grow enough to make its investors into millionaires?

Well, unfortunately, for all of its success to date, the math may be stacked against investors who buy in now. Here's why.

A red Tesla Model 3 with a city skyline in the background

Buying a Tesla costs a pretty penny, and so does buying Tesla shares. Will the investment pay off? Image source: Tesla.

A lack of value

Over the past year, Tesla's stock has been quite volatile, seesawing between about $250 a share all the way up to almost $375 a share. That's brought the company's market cap from highs of around $65 billion to lows of around $42 billion. For the sake of argument, let's say that an investor is able to buy into the stock at the low end of that range, about $250 per share. Let's also say that an investor can purchase 40 shares of the stock, for an initial investment of $10,000. Could impressive growth turn that investment into a cool $1 million?

Well, in order for that to happen, Tesla would have to grow by 10,000% (one hundredfold). That seems like a ludicrous number, but since going public in 2010, Tesla's share price has grown by an impressive 2,640%. However, as a company gets larger, rapid growth becomes more difficult. A company can only get so big, after all.

To put that number in perspective, in order to grow a hundredfold, Tesla's market cap would need to balloon to $4.2 trillion, assuming no dividends or share repurchases. That would be more than five times larger than Apple or Amazon, which currently have market caps of just over $750 billion. For any company -- let alone a car company -- this is next to impossible. Even for investors who bought in during Tesla's first year, when its market cap was less than $2.5 billion, a 10,000% return would make it the largest car company in the world by far, surpassing Toyota's (TM -0.49%) current $169.2 billion market cap.

Impossible growth

Now, there's certainly the possibility that Tesla's investments in solar installation and energy storage technology could pay off and turn it into more of a broad-spectrum electrical tech company than a car company. In fact, there's some evidence that Tesla's energy storage segment has just as much growth potential as its electric vehicle business. But the solar business has been on the decline for years, and Tesla doesn't seem to be investing heavily into that side of the business. The vast majority of Tesla's sales right now are of electric vehicles. So let's see if we can determine what a reasonable growth projection is for Tesla's automotive arm.

In 2018, Tesla delivered 245,240 vehicles. Interestingly, that's about the same number as Porsche delivered in 2017. But Porsche's market cap of $17.6 billion is only about one-third of Tesla's. 

By contrast, Toyota sold 8,964,394 vehicles around the world in its most recent fiscal year (April 2017-March 2018). In other words, Toyota sells 36.6 times the number of vehicles that Tesla sells in a year, but its market cap is only about three times as large. So even if Tesla managed to sell as many cars as Toyota -- which, just to be clear, would require an astronomical amount of growth -- it seems unlikely that investors would see a corresponding 3,600% gain in share price.

The middle ground

What seems more likely is that Tesla could grow into a BMW (with 2,463,526 vehicles sold worldwide in 2017) in five to 10 years. That would only require the company to sell 10 times the amount of cars it does currently, which seems a reasonable amount of growth -- possibly even on the low side. 

Here's the thing, though: BMW's market cap is nearly identical to Tesla's current market cap, at about $53.5 billion. If Tesla's market cap grew tenfold, it would be triple the size of Toyota. It's hard to believe investors would bid shares up that much even if Tesla was able to multiply its annual vehicle sales by a corresponding amount.

Of course, there's also always the possibility that the company could crash and burn, taking investors' money along with it. While that's seeming less and less likely, it's certainly an outcome that investors should consider before buying in.

Breaking the rules

In many ways, Tesla is a rule-breaking company, and its current valuation bears that out. Given that it isn't being priced like a car company, though, it's tough to know exactly how far the share price might climb if Tesla doubles its output, or triples it, or even boosts it tenfold. What is clear, however, is that the company probably isn't going to be able to grow enough to turn a modest investment into a million dollars.

That's not to say that an investment in Tesla is necessarily a bad idea -- although, at its current share price, it's tough to see how much upside there might be -- but it probably isn't going to make you a millionaire unless you're willing to make a pretty big (and risky) bet on the company's future.

Check out the latest Tesla earnings call transcript.