Tesla Stock is still pricy

The popular electric car marker is on a bad start even after the aftermath of upsides this month

Olumide Adesina•Saturday, May 11, 2024•2 min read

The popular electric car marker is on a bad start even after the aftermath of upsides this month. Still, Tesla stock hasn’t become any cheaper. It’s more costly than before.
Despite a roughly 30% decline so far this year, shares had increased by an astounding 992% in the previous five years. Tesla stock lost about a third of its value, despite a post-earnings bounce and confidence about Full Self-Driving. The share price has dropped by about 50% from its peak in late 2021.

Tesla is valued significantly higher than other successful automakers. The forward P-E ratio for Toyota Motor (TM) is 9. The forward P-E ratio for General Motors (GM) is 4. Li Auto (LI) has a forward P-E ratio of 15 among EV participants. The forward P-E ratio for EV powerhouse BYD (BYDDF) is 17. Tesla stated it has revised its “future vehicle lineup to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025.”
According to Tesla, these new cars would “use aspects of the next generation platform as well as aspects of our current platforms” and include “more affordable models.” The carmaker also stated that such new cars could be produced on the same assembly lines as its existing range of automobiles.

Elon Musk places a wager on the company, given that Tesla still holds a substantial market share in key markets. A large portion, if not the majority, of Tesla’s current market valuation is a bet that some of those moonshots will eventually pay off and generate enormous profits. In the Q1 earnings call, the Tesla CEO also stated that the company will be “showcasing” its Robotaxi, or “cybercab,” in August. 8 and that further discussion about a cheap car will take place then.

In the first quarter, Tesla’s free cash flow was negative by $2.55 billion due to the company’s $1 billion expenditure on “AI infrastructure.”. Additionally, the business stated that it will “continue to increase” the capacity of its AI infrastructure in the “coming months” and that it is presently developing ride-hailing functionality that will “be available in the future.”.

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ABOUT THE AUTHOR See More

Olumide Adesina

Financial Market Writer

Olumide Adesina is a French-born Nigerian financial writer. He tracks, analyzes, and reports changes in financial markets with over 15 years of working experience in investment trading.