Can Elon Musk’s Tesla maintain its lofty nearly $700 billion valuation? Analysts say…
Tesla has missed the earnings and sales expectations in its latest quarterly results making some people suspicious about the company's 700 billion dollar valuation
Elon Musk-led electric car maker Tesla has a market capitalisation of nearly $700 billion and is one of the most highly valued automakers in the world. Tesla shares have risen almost 80% this year and are among the top gainers in the S&P 500 Index for 2023.
However, the company recently missed both earnings and sales expectations for the third quarter. The EV maker had noted that its profit excluding some items fell to 66 cents per share, while revenue rose to $23.4 billion, still below analysts' expectations of $24.06 billion, Bloomberg reported.
Tesla experienced its first quarterly sales decline this year, delivering 4,35,059 vehicles - the lowest in more than four years. The carmaker had repeatedly slashed the cost of its cars in a bid to boost sales without compromising profitability, but the strategy doesn't seem to have paid off for the company.
In a call with analysts after the earnings, Musk was worried about the impact of high-interest rates on car buyers. He said, "If the macroeconomic conditions are stormy, even the best ship is still going to have tough times,"
Analyst review Tesla's hefty valuation:
Sanford C. Bernstein analyst Toni Sacconaghi told Bloomberg that Tesla will have to make the investors believe that it “can achieve very high volumes and high operating margins, akin to technology or software companies, not traditional auto companies,” to justify the high stock price.
He added, that “Tesla is increasingly looking like a regular auto company”
Senior research analyst at Roth Capital Craig Irwin told Reuters, "The current market valuation appears to rest on the specious assumption that the hundreds of EVs slated for launch by 2025 will all be flops. Tesla does not operate in a vacuum,"
Morgan Stanley analyst Adam Jones while speaking to Bloomberg agreed with the caution showcased by Musk after the earnings call. He, however, questioned, “how much of the caution is related to slowing demand for its already ubiquitous product lineup and increased competition?”
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Business NewsAuto NewsCan Elon Musk’s Tesla maintain its lofty nearly $700 billion valuation? Analysts say…
First Published:20 Oct 2023, 09:25 AM IST
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