June 13, 2024

Why Tesla’s stock is so expensive compared to other automakers?

Why Tesla’s stock is so expensive compared to other automakers?

Tesla goes on skyrocketing, rising to a new intraday record of $961 per share. The value of Tesla has gone way beyond all car manufacturers, including those that build millions of vehicles per year.

In the first half of 2019, Tesla suffered in the face of concerns about market demand and whether or not the company will make a profit.

But in the second half of the year, the stock bounced back, reaching a bevy of new, all-time high share prices and recording profits in both the third and fourth quarters. Tesla became the first U.S. automaker to cross a $100-billion market cap earlier this year. Tesla is expected to take advantage of its leading role in the electric vehicle industry and boost output in 2020 and beyond, given previous production delays, parts shortages, labor cost overruns, and other difficulties.

Tesla is more costly with lower growth than Amazon, is more inexpensive but has a higher growth rate than Apple or Netflix, and is affordable than Spotify but has “substantially lower growth.” After this study, the company stuck to its underweight rating and its price target of $360 on Tesla — more than 50 percent below current stock prices. Keep in mind the shares tend to be more costly than Amazon, Apple, and Netflix, even when using the analyst’s five-year cash flow and sales forecasts, which may prove to be too positive.

Although the hyper-growth story continues to manifest itself in consensus predictions and opinions, eventually generating a contrast with high-profile tech names, it is believed there is a range of exogenous risks that investors should remain mindful of, such as rivalry, execution, and other geopolitical concerns. Some analysts are concerned that Tesla’s rally — the stock has more than multiplied in six months — is a speculative bubble that often occurs in financial markets, especially close to the end of bull markets. Tesla went parabolic. This takes Tesla well above a level which its current fundamentals would support. Shortly after that, the stock would become clobbered entirely.

Tesla’s impressive run-up has drawn many parallels, but, three years ago, one of the most surprising was the bit coin bubble. Bit coin plummeted 65 percent in just a month after running up to nearly $20,000 – and ended around 80 percent below its highest point in 2018.

Yet other investors aren’t afraid, and instead, point to Tesla’s rapid rise as a minor issue of the stock starting to catch up where they think it should be. Tesla has not lost market share in the EV industry, and mainstream cars have been struggling to manufacture a vehicle that is on an equal footing with Tesla in terms of performance or efficiency. The projections would mean that Tesla’s market cap would comfortably surpass $1 trillion — nearly ten times the firm’s current valuation. At that point on, there is a lot of development potential going forward. Tesla could become one of the world’s largest companies.

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