In many markets like Germany, these accelerated in recent years, partly as a stimulus measure. A corollary to the Europe EV demand story has to do with government subsidies, and when EU countries may start to pull back from them. Like most of us learned in basic microeconomics, subsidies like this ultimately go to the manufacturer, since it allows them to raise the price by the same amount of the subsidy. Indeed, Tesla has been raising prices all year in anticipation of this. I have my doubts on Tesla’s ability to grow its valuation from here, but Tesla has strong tailwinds entering 2022, and has a very good chance of significantly exceeding estimates, especially over the next few quarters. By traditional metrics, Tesla’s valuation remains lofty and priced to perfection.

Earnings for Tesla are expected to grow by 39.94% in the coming year, from $3.18 to $4.45 per share. Tesla has not formally confirmed its next earnings publication date, but the company’s estimated earnings date is Wednesday, April 17th, 2024 based off prior year’s report dates. To form an opinion on Tesla’s pricing, start by deciding what kind of company Tesla is. Considering Tesla’s current valuation, it’s forex spread meaning clear most investors don’t view Tesla as a carmaker. Investors are paying a steep premium because they believe in Tesla’s ability to innovate, open new markets, diversify its business model and create massive shareholder value. As you can see from the recent price swings with Tesla stock, this could be a risky investment since there are so many factors at play when you invest your money into this company.

  1. One view of this chart is that Tesla is still growing in absolute terms and is dominating the market.
  2. Living up to its growth stock status, Tesla is trading at a P/E ratio of 83, which is significantly higher than the S&P 500 P/E ratio of 25.
  3. Therefore, EV stocks remain great long-term bets, and investors must look past the short-term volatility.

The company has been cutting prices around the world in key markets across Europe and China, as it faces rising competition from Chinese players like BYD and traditional automakers. Becoming a Teslanaire from electric vehicles, however, isn’t straightforward. That’s because cheap EV Moonshots today either have 1) unproven potential or are 2) provenly bad (which is why they’re cheap).

What’s Next For Tesla’s Shares?

Its sales grew by 93% from the prior-year period resulting in a revenue beat of $5.26 million on consensus estimates. Moreover, it generated a gross profit of $18.2 million in the quarter, its highest number on record. Its management aims to become free cash flow positive by 2024, which should be a major catalyst for its stock. For all the hype about electric vehicles, 98% of new cars are still traditional gas-guzzling cars. According to a Pew Research poll, almost 40% of Americans are considering buying an EV as their next car. If America starts tracking the rest of the world in EV adoption, demand could triple in three years.

Will Tesla Stock Go Up?

And with bondholders exiting their positions at significant losses, that tells us that common equity — which is only paid out after bondholders are made whole — is probably worth zero today. On Jan, 4, the firm announced it would move from direct-only sales to a hybrid model using existing dealerships. That suggests that the digital sales approach touted during its 2020 SPAC debut is bringing in too few customers, and that the lower-margin dealership approach is needed.

Musk’s Neuralink Places First Brain Chip in a Human. Why Big Tech Will Be Watching.

Therefore, it is one of the EV stocks with moon-shot potential. Due to supply-chain bottlenecks, it couldn’t expand its factory output. However, its recent third-quarter update has been more encouraging and suggests that its production ramp is going according to plan. Moreover, its reservations continue to increase each quarter, amounting to over $3.5 billion in potential sales.

And with some luck, the next millionaire-makers might be hiding among the tiny startups of the electric vehicle world. Famous growth investor Cathie Wood has a similar vision, albeit with a longer timeline. Citing Dojo as a growth factor for Tesla, Wood predicts Tesla will hit $1,400 or more by 2027. The consensus estimate doesn’t tell the whole story, however.

Therefore, in the current environment, it makes sense to look at Tesla primarily as a car company that has declining margins and expects to grow at a weaker rate than previously expected. Given its current state of affairs, it also makes sense to believe that the company continues to be overvalued even after the latest depreciation of its shares. As of today, Seeking Alpha’s Quant system gives Tesla a rating of ‘F’ for valuation since the company still trades at ~60 times its forward earnings and at almost 6 times its forward sales. In August, the stock dipped on news that Tesla had cut prices in China to defend its market share.

Secondly, don’t expect inflation to stand still — prices have a strange way of surprising investors. And finally, stay focused on assets that are doing well — reopening stocks, some altcoins and housing plays should do well as people start to spend money again. The third quarter of 2022 was another strong quarter with record revenue, operating profit and free cash flow. We achieved an industry-leading operating margin while encountering material headwinds YoY. Raw material cost inflation impacted our profitability along with ramp inefficiencies from Gigafactory Berlin- Brandenburg, Gigafactory Texas and 4680 cell production.

Tesla Stock Snapshot

“Overall, we expect our ability to be self-funding to continue as long as macroeconomic factors support current trends in our sales. The company is simultaneously ramping new products, building or expanding manufacturing facilities on three continents and piloting the development of new battery cell technologies, said the filing. The nuclear power industry is rapidly changing, with a new generation of advanced reactors under development. Centrus provides an integrated solution for meeting the industry’s engineering, manufacturing and fuel needs.

Competition will be a major challenge for Tesla in the years ahead. Going forward, consumers will have more choice in electric vehicles as other automakers increasingly look to win a piece of the EV market. We already know Tesla is willing to defend its market share by lowering prices. If you are an investor who still holds Tesla shares and wants to unwind the position – you’ll probably want to wait for a better exit point rather than sell a position after the washout already happened. If you’re a trader who plans to short the shares – it would make sense to wait for a short-term appreciation so that the stock has exited the consolidation stage before committing to the trade at the current price. If you’re interested in a long-term position in Tesla shares – it would make sense to wait a few months before deciding at what price it’s best to commit to the investment.

I’ve never been a huge fan of consumer staple plays as Moonshots (unless they’re extraordinarily cheap or have excessive leverage). That’s because guessing economic conditions might earn you 10% here and there; consumer staples are low-risk, low-return by their nature. Unfortunately, shorting these companies is also a recipe to get slowly burned by dividend payments. Corn, soybeans and lean hogs are also down double-digits from their peaks. Of the major commodities, only OPEC-controlled oil has largely escaped deflationary pressures. Yet, all three companies reached a $5.5 billion valuation without generating significant sales.