Features Of Tesla Stock
Now that we have covered the technicals, in this section we take a much closer look at fundamental reasons and main features of Tesla stock.
Strong Quarterly Earnings Report
Teslas most recent quarterly earnings report provided some exceptionally strong results. First and foremost, revenues were up 64% year-on-year, with net income growing by more than 740%.
Net profit margins increased by 421%, while operating income grew by 354%. The only chink in the armor with Teslas most results is that based on a year-on-year basis, the figures are somewhat skewed.
After all, production levels were reduced in 2021 as per COVID-related restrictions. Nevertheless, in the grander scheme of things, Teslas most recent report impressed the markets.
Vehicle Delivery Figures Continue to Rise
Another metric to look at before you buy Tesla stock is with respect to the firms vehicle delivery numbers.
This essentially takes into account two key figures the number of vehicle orders Tesla is getting from customers and at what rate the firm is able to meet this demand.
In 2021, Tesla reported an impressive 1 million vehicle deliveries. To put this into perspective, this stood at just under 368,000 and 500,000 in 2019 and 2020 respectively.
Crucially, market analysts predict that in 2022 Tesla could double its vehicle delivery figures to 2 million. In order for Tesla to meet its goals, the firm is opening new production plants in Texas and Germany.
Should You Buy Tesla Stock The Best Way To Play Shares Now
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Its hard to predict the future, but one thing is almost certain: Electric cars will be more popular tomorrow than they are today. The recent surge in oil and gas prices will likely cause seismic shifts in consumer demand and vehicle preferences. Many people are paying almost double what they did a year ago to fill up their cars and trucks.
Oil prices are unlikely to decline anytime soon, with demand outstripping supply. Its a major reason why the world has been blanketed by extraordinary inflationary pressures that have prompted central banks to raise interest rateswhich, in turn, has sparked fears of a global recession.
Strong Growth And Superior Profitability
In terms of vehicle production, Tesla has been full of great news in recent reports. Q1 production rose 69% year over year, which drove automotive revenue growth by 87% year over year. Because revenue grew faster than production, Tesla is generating better margins on every vehicle it produces. This margin increase comes, in part, from price hikes instituted throughout 2021 and increases in production efficiency for its Model S and X, which are higher-priced vehicles.
This revenue growth is definitely trickling down to the bottom line, as quarterly net income rose 658% year over year. Even more impressive was Tesla’s 17.7% net income margin, placing it among the best in the auto industry.
TSLA Profit Margin data by YCharts
Tesla is nearing luxury vehicle margins. Because of this, it should be valued closer to Ferrari at 35 times earnings rather than General Motors at six or Toyota with a price-to-earnings ratio of 8.6. While Tesla is still valued at 90 times earnings, it could reach that threshold if it maintains its growth.
Management also gave investors a great piece of news: It expects to grow its vehicle deliveries by 50% annually over multiple years. Using this forecast to model revenue growth and keeping Tesla’s 17.7% profit margin, Tesla could have $14.9 billion in earnings at the end of 2022. This means Tesla trades for 49.5 times full-year 2022 earnings, not a bad valuation for a company that expects to grow around 50% annually over the next few years.
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Is Tesla Stock A Buy After The Split
The EV market leaders strong brand drives pricing power, Morningstars analyst says.
Tesla TSLA is the largest battery electric vehicle maker in the world. In less than a decade, the company went from a startup to a globally recognized luxury automaker with its Model S and Model X vehicles. In addition to luxury autos, the company competes in the midsize car and crossover SUV market with its platform that is used for Model 3 and Model Y vehicles. Tesla also plans to produce and sell new vehicles over the next several years. These include a light truck, a semi truck, a sports car, and a platform that will be used to make an affordable sedan and SUV. Teslas strategy is to maintain its market leader status as EVs grow from a niche auto market to reaching mass consumer adoption.
So Should You Buy Tesla
If you’re confident Tesla can more than 10x its annual deliveries, more than 10x its annual net income, and figure out its energy and FSD businesses, the stock could be a good buy here. I think that is a tall task and adds a ton of risk to an investment in Tesla at these prices. With hundreds of other stocks out there for investors to buy, I think it is smart to put your money elsewhere and avoid Tesla stock right now.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fools board of directors. Brett Schafer has no position in any of the stocks mentioned. The Motley Fool owns and recommends Alphabet and Tesla. The Motley Fool recommends Alphabet . The Motley Fool has a disclosure policy.
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How To Invest In Tesla With Index Funds
Tesla can be a very volatile investment.
You can lower the risk you see extreme highs and lows by diversifying your investment holdings. An index fund, for instance, contains hundreds or thousands of individual stocks and is the easiest way to diversify your portfolio, according to Valerie Rivera, a certified financial planner .
TSLA currently makes up about 1.5% of the S& P 500, meaning 1.5% of each dollar you invest in an S& P 500 index fund goes to Tesla. If you want an index with even larger TSLA representation, you might consider investing in a Nasdaq index fund, where Tesla accounts for almost 4% of holdings.
If youre unsure whether to invest in individual stocks or investment funds, arent sure how much you can afford to invest or dont know what investment strategy to use, meet with a financial advisor for personalized guidance.
How To Buy Tesla Stocks In 2022
To get the ball rolling, we will show you how to invest in Tesla stock with the broker of your choice. Follow this simple guide to get started:
- Step 1 Open a Trading Account: Users can head over to the website of their preferred broker and begin the registration process. Enter your personal details and create a username and password.
- Step 2 Upload ID: Get your newly created account verified instantly by uploading a copy of your ID. Choose from a passport, state ID, or drivers license. Users may also be required to provide a proof of address document, such as utility bill or bank statement.
- Step 3 Deposit Funds: Users can deposit funds by choosing a payment method which may include e-wallets, credit/debit cards, and ACH.
- Step 4 Buy Tesla Stock: Users can search for Tesla stock on the search bar of their platform and begin the open order process. Enter the amount you wish to invest and confirm the transaction.
Your capital is at risk. 83.45% of retail investor accounts lose money when trading CFDs with this provider.
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Legacy Automakers Have All Outlined Their Plans To Take On Teslas Ev Dominance Here Are 9 Reasons I Still Believe Tesla Is A Long
If you bought Tesla when I originally recommended it to my readers youd have generated a significant return. How much exactly? Well as of right now those early buyers have a profit of more than 11,000%.
Automotive industry heavyweights have finally realized that the future is electric, and in 2020 and 2021 they made a slew of announcements about spending serious money on electrifying their fleets. $35 billion in spending was announced by GM , $30 billion by Ford with the goal of electrifying 40% of its volume by 2030, and Daimler announced plans to spend $47 billion to shift to all-electric by 2030.
Legacy automakers have made it abundantly clear that competition is coming. Still, I think you can buy TSLA, as it will maintain its lead for many years to come. Heres why:
OneTesla has no legacy fossil fuel business to protect, because the company has been laser-focused on electric cars from the start. In fact, Teslas mission is to accelerate the worlds transition to sustainable energy, which is why the company is also making great progress in solar power systems and battery storage systems.
TwoTesla does no paid advertising. Not in print, not on the radio, not on television and not on the internet. In 2019, Ford spent $2.8 billion advertising in the U.S., while GM spent $3.7 billion.
FiveTesla has achieved accelerating revenues over the past four quarters, as detailed in the numbers below.
What The Tesla Stock Split Means For Investors
Tesla CEO Elon Musk attends the official opening of the new Tesla electric car manufacturing plant, … officially called the Gigafactory Berlin-Brandenburg.
You may have heard about the Tesla stock split that just happened. The electric vehicle maker had another stock split on August 24, 2022. One week on, lets take a pause to reassess.
- This lower price per share makes the companys stock more attainable for retail investors, who will hopefully buy shares and increase the overall value of the company.
- Investors often react strongly to stock splits in the short term, you cant forget that investing is about assessing the performance of the business.
- Amazon, Google and Shopify also had stock splits in 2022.
The Tesla stock split has garnered interest from retail investors and folks who have been watching the market closely. In addition, the recent Inflation Reduction Act has placed more attention on the electric vehicle industry as experts attempt to determine how the allocation of funds will work.
With Tesla being the sixth largest company in the world and the U.S EV market relying heavily on its success, theres justifiably been plenty of discussion about this stock split. So were going to look at the Tesla stock split to determine if it changes the value of the stock, and give you what you need to know about it moving forward.
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Is Tesla Stock Undervalued Or Overvalued
Valuing Tesla stock is incredibly difficult, and any metric has to be viewed as part of a bigger picture of Tesla’s overall performance. However, analysts commonly use some key metrics to help gauge the value of a stock.
Tesla’s P/E ratio
Tesla’s current share price divided by its per-share earnings over a 12-month period gives a “trailing price/earnings ratio” of roughly 103x. In other words, Tesla shares trade at around 103x recent earnings.
That’s relatively high compared to, say, the trailing 12-month P/E ratio for the NASDAQ 100 at the end of 2019 . The high P/E ratio could mean that investors are optimistic about the outlook for the shares or simply that they’re over-valued.
Tesla’s PEG ratio
Tesla’s “price/earnings-to-growth ratio” can be calculated by dividing its P/E ratio by its growth to give 2.1372. A low ratio can be interpreted as meaning the shares offer better value, while a higher ratio can be interpreted as meaning the shares offer worse value.
The PEG ratio provides a broader view than just the P/E ratio, as it gives more insight into Tesla’s future profitability. By accounting for growth, it could also help you if you’re comparing the share prices of multiple high-growth companies.
Tesla’s EBITDA is $14 billion.
The EBITDA is a measure of a Tesla’s overall financial performance and is widely used to measure a its profitability.
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Is It Better To Buy Tesla Before Or After The Stock Splits
No one has a crystal ball, so its impossible to say what Tesla stock will do immediately before or after the stock splits. It is safe to say, however, that since the split has been announced, most of the impact of the split has been largely baked in to the current trading price.
In other words, investors in the know are basing their purchases and sales of Tesla stock with the split in mind.
Tesla Is Not Your Typical Automaker
How does Tesla have such a high profit margin compared to legacy automakers? First, it cut out the middleman. Because Tesla sells directly to consumers, it doesn’t need to share profits with dealers. This business model has rubbed many people the wrong way, but it benefits Tesla significantly.
It also is solely focused on electric vehicles . Regardless of your feelings toward EVs, it’s clear the auto industry is moving in that direction. While the legacy automakers are still a couple of years out from total EV production, Tesla is full steam ahead. It’s gaining a first-mover advantage and capturing many customers while other manufacturers are still prototyping or only just now ramping up production. Furthermore, Tesla’s four production models are all in the top 10 of Consumer Reports’ most satisfying cars, ranked first, third, fourth, and tenth, respectively.
EVs also have another tailwind blowing in their favor: rising gas prices.
US Retail Gas Price data by YCharts
With the average price of gasoline in the U.S. hitting record highs, more consumers are seriously considering making the switch to EVs for their next vehicle purchase. If Tesla can keep up with the demand, it should be able to capture customers before the legacy automakers can, giving Tesla a big advantage.
Image source: Tesla.
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Vehicle Production Could Be Even Better This Year
It would be one thing if Tesla’s stellar quarter was a one-off, but it isn’t. The company believes it has a “reasonable shot” at increasing vehicle production another 60% this year, compared to 2021.
Part of that optimism comes from the fact that the company’s factory in Shanghai is “coming back with a vengeance,” according to Tesla CEO Elon Musk, after COVID-19-related shutdowns curbed production last year.
Additionally, Tesla’s newest factories, in Germany and Texas, only just came online in March and April. Tesla is still overcoming some production hurdles from the two plants, with Musk saying recently that the factories are “losing billions of dollars” right now, due to supply chain issues. But both are expected to significantly increase their production output this year and Tesla hasn’t changed its previous statement of aiming for 60% higher vehicle production this year — which would equal about 1.5 million vehicles.
What’s Happening With The Tesla Shareholder Lawsuit About Solar City
On July 12â13, 2021, Musk testified in a lawsuit brought by Tesla shareholders. The plaintiffs alleged that he used Tesla’s 2016 acquisition of SolarCity to bail out SolarCity while chairing both companiesâ boards. Closing arguments in the case took place in January 2022, with lawyers for the plaintiffs arguing Musk should return the Tesla shares he received for his SolarCity stock, valued as of January 2022 at $13 billion. A ruling in the case remained pending as of April 21, 2022.
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Have Tesla’s Shares Ever Split
Tesla’s shares were split on a 5:1 basis on 30 August 2020. So if you had owned 1 share the day before before the split, the next day you’d have owned 5 shares. This wouldn’t directly have changed the overall worth of your Tesla shares just the quantity. However, indirectly, the new 80% lower share price could have impacted the market appetite for Tesla shares which in turn could have impacted Tesla’s share price.
Is Musk Biting Off More Than He Can Chew
It can be argued that no CEO has taken on more responsibility than Elon Musk. In addition to running Tesla, Musk is also founder and chief executive of SpaceX, which has a stated mission of colonizing Mars. SpaceX also owns and operates the Starlink satellite internet network. Musk is also founder and CEO of tunnel maker the Boring Co. Further, Musk runs Neuralink, which seeks to tie human brains to computers.
With all that going on, Musk watchers say he may have overextended himself with the plan to buy Twitter. In that regard, dropping that plan could have benefits.
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