Not Cars. Not Energy Storage. Tesla’s Robotics and Robotaxi Ambitions Are the Real Reason the Stock Is Priced Like a Tech Company.
Most investors understand that you typically have to pay a premium price to buy good growth stocks. But shares of electric vehicle (EV) maker Tesla (NASDAQ: TSLA) are taking the premise to an extreme. The stock’s currently priced at 200 times this year’s projected earnings of $1.75 per share, and over 160 times next year’s expected earnings of $2.16 per share. That’s expensive by any standard, including in the technology sector.
The valuation (sort of) makes sense, though, when you understand what Tesla is in the process of becoming. Soon, it will no longer be an EV company that also makes and markets solar panels and energy-storage batteries. Instead, the plan is for it to be a robotics and robotaxi outfit that also manufactures electric vehicles. Investors are pricing the stock based on this hoped-for future rather than what the business is doing in the present. Here’s what they need to know.
Although the company is winding down its solar roof tile business, it still makes and markets its own solar panels, as well as the energy storage equipment that makes these panels practical power sources. Moreover, EVs remain Tesla’s biggest business — accounting for $20.5 billion of its $28.2 billion in Q2 revenue — and Tesla is still the second-biggest name in the global EV market, right behind China’s BYD. Moreover, last quarter’s year-over-year top-line growth of 26% suggests the company still has a little bit of magic left.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.