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Is Tesla Stock Overvalued?

As of today, Tesla is officially the world’s most valuable automaker. Tesla Stock went from a low of ~$353 per share in March, to currently trading at over $1120 per share. That’s over a 215% increase in a little over 3 months! This puts Tesla’s total market cap at over 208 Billion, ahead of the former #1 spot – Toyota (203B). To put these large numbers into perspective even further, here’s a list of other competitor automakers:

Image Credit: Spencer Platt/Getty Images

Tesla: $208 billion 

Toyota: $203 billion 

Volkswagen: $79 billion 

Honda: $46 billion 

BMW: $41 billion 

GM: $37 billion 

Ferrari $32 billion 

Ford: $24 billion 

Subaru: $16 billion 

Fiat Chrysler: $16 billion 

Nissan: $15 billion 

Mazda: $4 billion

Does Tesla Deserve It’s Price Tag?

Image Credit: Tesla.com

Prouction Volume: The automaker’s stock price has puzzled some analysts with its continued parabolic rise despite a series of controversies and set backs. Tesla’s new status as most valuable automaker in the world doesn’t match up with its overall sales volume. However, investors seem unfazed. Tesla has certainly made many improvements such as accelerated production and deliveries. Tesla delivered 367,500 electric vehicles in 2019 — 50% more than the previous year — a record breaking figure largely supported by sales of the cheaper Model 3.

Toyota produces 10 million vehicles annually. A big jump vs. 367,500, even despite the sales price differences.

Irrational Exuberance: Tesla seems to have eluded traditional rules that investors have applied to automakers. The company is viewed more as a tech company chasing innovation than an automaker. There is also undoubtably a cult-like following for the brand as well as CEO Elon Musk. The unwavering support and enthusiasm towards the brands monumental aspirations is likely pushing the price higher than it should be. Analysts’ valuations often focus on future speculative products more than current quarterly figures such as delivery, production numbers, and revenue. Even during COVID-19 related slowdowns as well as temporary suspension of production, investors continued pouring in to buy in and push the share price higher.

Do you believe Tesla is currently overvalued, or will it continue rising to new highs?

Only time will tell.

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