There is no reason for heated discussion among investors such as Tesla (NASDAQ: TSLA). Every one of them seems to have a clear opinion on the world largest carmaker by market cap from his notorious CEO, Elon musk, to his vehicle designs (well, what’s wrong with Cybertruck?) and to basic questions on his balance sheet.
Let’s mention one of the main questions for investors concerned about acquiring TSLA STOCK shares: is Tesla overvalued? It’s like a straightforward question, but it’s more than the eye meets.
It is impossible to not believe that the business is over-valued if you just look at the Tesla raw numbers. Consider the most frequent calculation method: the price-to – earnings ratio. We may also review the value-to-EBITDA ratio of firms and the price-to – sales ratio for a good indicator. Tesla compared No 2 Toyota (NYSE: TM), General Motors (NYSE: GM), and BMW Luxury Carmaker (OTC: BAMXF) with other major auto manufacturers:
One thing isn’t like the other
The valuation measurements of TSLA STOCK range from eight to 23.6 times that of its closest rival per metric (better is lower). In comparison, BMW, which is by market cap the lowest, sold 675,680 cars in Q3 2020, almost five times more than Teslá’s 139,300. Instead, the figure is also much higher than that of Tesla.
Tesla bulls contend that Tesla ‘s price is stupid compared with other automakers. But Tesla should not be compared to other car manufactures. They contend. One thing is that the sales of Tesla increase spring and end and that value metrics decline as these sales rise. It is no anomaly to see a far higher value for a fast-growing business than an existing player in a given market.
A higher P / E ratio for Tesla is meaningful because its properties are significantly more depreciable than NVIDIA, but the EV-to-EBITDA ratio, which excludes depreciation, gives NVIDIA a better valuation. However, NVIDIA was even longer than Tesla.So, the question seems to be: is Tesla more like rapidly rising starts, or more like existing NVIDIA or Toyota players, Zoom Video Communications or Shop?
Time is going to say
It’s not easy to answer this question. Certainly TSLA STOCK profits from producing electric vehicles for long stretches and has also an expertise in the related technologies, the design issues, supply chains, etc., over many of its rivals in electric cars. It may also have a large technical and patent neck.
Competition in space will be ferocious, though, with emerging electric car startups and existing car makers releasing a wave of battery electric cars. If you want to invest the Tesla stock, you need check more information like cash flow at https://www.webull.com/cash-flow/nasdaq-tsla.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.