- June 14 (Reuters) – Tesla (TSLA.O) opened for business, but even after many years of share decline, the electric vehicle maker’s stock is still highly valued. Shareholders accepted CEO Elon Musk’s $56 billion compensation plan, which was seen as an affirmation of his leadership.
- Tesla’s shares increased by about 3% on Thursday ahead of the meeting, even though Musk may still have a difficult time persuading the Delaware court who rejected the compensation plan in January. Musk said on his social media site 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 offering less costly vehicles.
- Tesla’s stock price saw a much-needed increase when Musk said on April 23 that the company would introduce new, more reasonably priced models in 2025. For the first time since 2020, when the COVID-19 epidemic hindered manufacturing and delivery, its quarterly income decreased.
- Meanwhile, the other tech giants on Wall Street have surged. In 2024, the number of new tabs opened by Amazon (AMZN.O), Alphabet (GOOGL.O), Meta Platforms (META.O), and Nvidia (NVDA.O) increased by over 40%, 20%, and almost quadrupled, respectively. Additionally, Broadcom (AVGO.O) and Eli Lilly (LLY.N) have surpassed Tesla in terms of stock market valuation (opens a new tab).
- The hope that analysts had for Tesla has sharply decreased. As of Thursday’s closing price of $182.47, the average analyst price estimate for Tesla is $181, down from $226 at the beginning of 2024, according to LSEG.
- 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 vehicle 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 about 22 in January.
- In contrast, LSEG indicates that Toyota (7203.T) is trading at nine times projected profits, while General Motors (GM.N) and Ford Motor (F.N) are selling 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 almost 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 of 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.
Source:
reuters
