Elon Musk’s $56 billion compensation plan was accepted by Tesla shareholders in what was perceived as a vote of confidence in his leadership, but even after several years of share decline, the company’s stock is still highly valued.
At Thursday’s annual general meeting of Tesla, supporters reaffirmed Elon Musk’s record-breaking 2018 salary, which they claimed was essential to keeping the billionaire concentrated on the automaker.
Tesla’s stock increased by about 3% on Thursday ahead of the meeting, despite the possibility that Musk will have a difficult time persuading the Delaware judge who disqualified the pay deal in January. Musk announced on his social media platform X that he had received shareholder approval.
Even with Thursday’s advances, Tesla’s market valuation has more than halved to $582 billion from its November 2021 high, with its shares down 27% so far this year. This is because the company is up against severe competition in China from BYD and other EV manufacturers selling less expensive cars.
Musk’s announcement on April 23 that Tesla will introduce new, more reasonably priced models in 2025 gave the company’s stock a much-needed boost. For the first time since 2020, when the COVID-19 epidemic hindered manufacturing and deliveries, its quarterly income decreased.
Meanwhile, the other titans of Wall Street’s technology sector have flourished. In 2024, Nvidia nearly tripled, Amazon and Alphabet earned over 20% apiece, while Meta Platforms climbed over 40%. In terms of stock market valuation, Broadcom and Eli Lilly have surpassed Tesla.
The hope that analysts had for Tesla has sharply decreased. According to LSEG, the average analyst price estimate for Tesla is currently $181, down from $226 at the beginning of 2024, and only marginally less than the closing price of $182.47 on Thursday.
In addition to its stock having historically traded at earnings multiples greater than many technology businesses, Musk has advised investors to think of Tesla as a “AI robotics company” as opposed to a car manufacturer.
Although it is still far below the price-to-earnings ratio of 150 set in November 2021, Tesla shares are now trading at approximately 61 times projected earnings, up from roughly 22 in January.
In contrast, LSEG indicates that Toyota is trading at nine times projected earnings, while General Motors, Ford Motor, and other companies are trading at forward PE multiples of five and six, respectively.
Tesla’s stock market value is comparable to approximately $6 million per person, down somewhat from two years ago but still nearly 20 times greater than GM and Ford, which each have roughly $300,000 in market value per employee. This further illustrates Tesla’s high valuation in relation to its company.
In contrast to GM and Ford, a portion of Tesla’s workforce is employed by global service centers, which are comparable to the networks of independently owned GM and Ford dealerships.
Tesla continues to be the most valued carmaker in the world despite its downturn, much ahead of Toyota, which is the largest carmaker globally in terms of volume.
Toyota is valued at roughly $270 billion on the stock market. 2020 saw Tesla surpass the combined valuations of Toyota, Volkswagen, Hyundai, GM, Ford, and BMW because to the company’s skyrocketing stock price.
Due to its declining share price, Tesla’s value decreased in January compared to the total value of the other big automakers.
