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    TSLA   US88160R1014

TESLA, INC.

(TSLA)
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Tesla heads to the S&P after meteoric rise and some investors want more

12/18/2020 | 02:52am EDT
Logo of car manufacturer Tesla is seen at a branch office in Bern

NEW YORK (Reuters) - Is it too late to join the Tesla party?

Shares of the electric vehicle maker are up nearly 700% over the last year, a meteoric rise that has punished short-sellers and turned it into the world's most highly-valued automaker.

The company's formal entry into the S&P 500 on Monday is expected to generate unprecedented activity near the close of trade on Friday as index-tracking funds load up on shares so their portfolios correctly reflect the index.

Still, Wall Street is divided over whether Tesla's days of heady gains are numbered.

Overall, Wall Street analysts have long been skeptical of Tesla. The 35 analysts tracked by Refinitiv have an average price target of $396.30 per share, which would represent a 36% decline from its current price. Yet in a sign of how split Wall Street is on the stock, target prices range from a high of $774 per share by Elazar Advisors to a low of $40 by GLJ Research.

Tesla closed Thursday at $655.90.

Some long-term investors say that they still expect to see Tesla post above-average gains due to increasing adoption rates in the global electric vehicle market and its solar energy business. At the same time, investors remain convinced that billionaire Elon Musk, the chief executive of Tesla, will continue to push the company's disruptive technology ahead of its competitors.

"It's become clear this year just how far ahead of the competition the company is in terms of not only its technological abilities but its combination of range and performance at an affordable price," said Gary Robinson, portfolio manager of the Baillie Gifford US Equity Growth fund, who owns the stock.

Tesla will likely prove to have a more profitable business model than its rivals and post accelerating growth rates in its solar business, allowing its stock to more than double over the next 5 years, he said.

Overall, Tesla trades at 175 times its estimated earnings per share over the next 12 months, compared with valuations at 14 times estimated earnings per share for BMW and 16 times estimates earnings for Toyota Motor Corp, according to a research note from JP Morgan.

At the same time, Tesla is expected to earn $2.29 per share on $30.8 billion in revenue during its current fiscal year, while General Motors is expected to earn $4.67 per share on $120.7 billion in revenue, according to Refinitiv.

Its inclusion in the S&P will push the forward price to earnings ratio of the S&P 500 index up an additional 0.4 times to near its highest valuation in history, according to a note from Goldman Sachs.

"Tesla's multiple of earnings is very high in nominal terms for any company in any industry at any time in history," the firm noted, keeping its $80 price target on the company's shares.

Despite the stock's high valuations, some long-term investors say that they are sticking with the company. "Near term valuations tend to be less meaningful over time when you invest in right teams," said Anthony Zackery, a portfolio manager at Zevenbergen Capital Investments.

Bears still abound in Tesla, focusing on Musk's track record of missed production targets, and on corporate governance risk after Musk was forced to step down as chairman to settle fraud charges in 2018.

Despite handing short sellers $33.8 billion in mark-to-market losses since the start of the year, Tesla remains the company with the most total money bet against it in the U.S. market, according to S3 Partners.

"At some point you do short the stock because this is probably the last big move for a while for Tesla," said Charles Lemonides, portfolio manager of ValueWorks LLC, who does not currently have a position in the company.

"Up until now betting against Tesla has been a very dangerous thing to do, but it may get to a place where it's completely overextended," he added.

(Reporting by David Randall; additional reporting by Noel Randewich, editing by Megan Davies, Ira Iosebashvili and Richard Pullin)

By David Randall


ę Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
BMW AG 1.34% 88.71 Delayed Quote.21.20%
DJ INDUSTRIAL 0.24% 35826.5 Delayed Quote.16.57%
GENERAL MOTORS COMPANY 0.38% 58.07 Delayed Quote.38.71%
NASDAQ 100 1.24% 15693.536395 Real-time Quote.19.14%
NASDAQ COMP. 0.93% 15366.641042 Real-time Quote.17.08%
S&P 500 0.52% 4590.49 Delayed Quote.21.00%
TESLA, INC. 5.05% 1075.79 Delayed Quote.45.23%
TOYOTA INDUSTRIES CORPORATION -0.52% 9510 End-of-day quote.16.12%
TOYOTA MOTOR CORPORATION -1.87% 1946.5 End-of-day quote.22.31%
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Analyst Recommendations on TESLA, INC.
More recommendations
Financials (USD)
Sales 2021 50 954 M - -
Net income 2021 4 857 M - -
Net cash 2021 9 579 M - -
P/E ratio 2021 235x
Yield 2021 -
Capitalization 1 029 B 1 029 B -
EV / Sales 2021 20,0x
EV / Sales 2022 14,4x
Nbr of Employees 70 757
Free-Float 79,9%
Chart TESLA, INC.
Duration : Period :
Tesla, Inc. Technical Analysis Chart | TSLA | US88160R1014 | MarketScreener
Technical analysis trends TESLA, INC.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 33
Last Close Price 1 024,86 $
Average target price 788,09 $
Spread / Average Target -23,1%
EPS Revisions
Managers and Directors
Elon Reeve Musk Technoking of Tesla
Zachary J. Kirkhorn Master of Coin
Robyn M. Denholm Chairman
Ira M. Ehrenpreis Independent Director
James Rupert Murdoch Independent Director
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