But when it comes to valuations, Tesla remains the fourth-most expensive stock in the NYSE FANG+ index, trading at a forward multiple of 33x its 2022 projected earnings.
worth $440 billion
The company has a market capitalization of approximately $440 billion, far larger than any other major global automaker. The second largest Toyota is worth about half that. Toyota is estimated to sell 8.9 million vehicles in fiscal 2023 (ending March 31), according to data compiled by Bloomberg, while Tesla is expected to deliver about 1.3 million in calendar year 2022. Indeed, bulls point to Tesla’s margins being much higher.
“Tesla is still a high-growth company that trades like a tech company while other car makers don’t,” said Khan of Shelton. “Valuations still look high as people think the EV complex will grow exponentially and Tesla will be one of its major players.”
For some, it suggests there is room for the stock to fall even further. Momentum is certainly not on Tesla’s side. There have been no developments in 2022 that have boosted the stock price over the long term, such as a stock split decision or a potential share buyback.
Musk’s Twitter poll on the resignation of the company’s CEO didn’t stop the decline either. And Tuesday’s confirmation that he was indeed stepping down from the position didn’t spark a major bailout rally.
Many Tesla investors believe Musk’s ability to make Tesla a success forms the basis of its potential. This helps explain in part why Tesla’s stock price plunge has been so severe in a year when Tesla’s earnings are expected to grow by more than 80%, with earnings expected to grow by nearly 55%.
“From a brand standpoint, Elon Musk is Tesla and Tesla is Elon Musk,” said Robert Shine, chief investment officer at Blankeshine Wealth Management, which owns Tesla shares. The more politically exploited he is, the more likely he is to damage the Tesla brand.”
Schein, who expects the company to become a major player in EVs in the long term, is waiting for the stock to drop further to add more shares.
“If Tesla drops 15% to 20% from here, we will buy,” he said.