Tesla (TSLA) has had a terrible start to 2024. But Tesla stock hasn't gotten any cheaper, by a key metric. In fact, it's more expensive than ever.
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Often when a stock sells off hard, investors and Wall Street analysts will tout it as a buy, citing much-cheaper valuations.
Even with a post-earnings rebound and optimism about Full Self-Driving, Tesla stock has plunged 28.8% through May 17, one of the worst performers on the S&P 500 this year. Shares are more than 50% below their late 2021 all-time high. But Tesla hasn't fallen in recent months as earnings estimates amid weaker-than-expected deliveries despite ongoing price cuts.
Tesla Stock Valuation
| Date | Tesla stock price | 2024 EPS estimate | 2024 P-E ratio | 2025 EPS estimate | 2025 P-E ratio |
|---|---|---|---|---|---|
| Dec. 30, 2022 | 123.18 | $7.07 | 17.4 | $7.93 | 15.5 |
| March 31, 2023 | 207.46 | $5.62 | 36.9 | $6.95 | 29.8 |
| Sept. 29. 2023 | 250.22 | $4.68 | 53.5 | $6.21 | 40.3 |
| Oct. 31, 2023 | 200.84 | $3.93 | 51.1 | $5.54 | 36.2 |
| Nov. 30, 2023 | 240.08 | $3.85 | 62.3 | $5.40 | 44.5 |
| Dec. 29, 2023 | 248.48 | $3.79 | 65.5 | $5.27 | 47.2 |
| Jan. 31, 2024 | 187.29 | $3.14 | 59.7 | $4.38 | 42.8 |
| Feb. 29, 2024 | 201.88 | $3.10 | 65.2 | $4.25 | 47.5 |
| March 28, 2024 | 175.79 | $2.87 | 61.25 | $3.91 | 45 |
| April 30, 2024 | 183.28 | $2.47 | 74.2 | $3.34 | 54.9 |
| May 18, 2024 | 181.19 | $2.44 | 72.8 | $3.32 | 53.5 |
Source: FactSet
Elon Musk cheered Tesla bulls on the April 23 earnings call with talk of "affordable" EVs, robotaxis and higher deliveries in 2024. A few days later, Musk reportedly won tentative approval to launch FSD in China. But Wall Street has kept cutting its earnings estimates.
Analysts now see 2024 earnings per share targets at $2.44 a share, according to FactSet, down from $3.79 at the end of 2023, $5.62 a share at the end of March 2023 and a whopping $7.07 at the end of 2022.
So the forward price-earnings ratio for Tesla stock is 72.8 as of May 5. Except for April 30, that's higher than any end-of-month reading going back at least 18 months. It's well above the 2024 P-E ratio of 36.9 back on March 31, 2023, let alone the 17.4 P-E ratio at the end of 2022.
The same trend holds for 2025. Analysts have cut Tesla earnings per share estimates for 2025 to $3.32 vs. $5.27 at the end of last year. Analysts expected $6.95 on March 31, 2023 and $7.93 at the end of 2022.
The 2025 P-E ratio for Tesla is now 53.5, up from 45 at the end of March. Aside from April 30's 54.9, that's higher than any end-of-month reading over the past 18 months. It's up substantially from the 2025 P-E ratio of 29.8 at the end of March 2023 and 15.5 at the end of 2022.
Tesla's valuation is far above that of other profitable automakers. Toyota Motor (TM) has a forward P-E ratio of 9. General Motors (GM) has a forward P-E ratio of 4. Among EV players, Li Auto (LI) has forward P-E ratio of 13. EV giant BYD (BYDDF), has a forward P-E ratio of 17.
Ferrari (RACE) is the only one close to Tesla, with a forward P-E of 50.
Investor's Business Daily usually doesn't focus on price-earnings ratios, because many leading stocks boast high valuations as investors bet on strong growth to justify them. During its huge run, Tesla was a growth company with high P-E ratios. But it's not a growth company right now.
Tesla Stock Bull Case
Of course, to an increasing extent, the Tesla bull case is looking beyond 2025. Some analysts, most famously Morgan Stanley's Adam Jonas, ascribe the bulk of their Tesla stock price targets to outside of EVs and for big bets such as self-driving, robotics and artificial intelligence.
With Tesla apparently shelving a truly new vehicle for several years, Musk is making that bet as well.
Clearly, much or even most of Tesla's current market valuation is a bet that some of those moonshots will pay off down the road, delivering massive profits.
Whether or not they pay off is an open question.
But Tesla stock still isn't cheap.
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