Annual delivery of 500000 cars, profits of $700 million, Tesla on this seat in the top car companies?


Tesla has become the most valuable auto company in the S & P 500 index
Tencent technology news on February 22, electric vehicle manufacturer Tesla is now one of the companies with the highest market value in the S & P 500 index (S & P 500). But in many key ways, the company is very different from other companies of the same size.
Tesla’s share price has soared more than 300% in the past 12 months, making the company’s market value exceed $800 billion at one time. As of Thursday local time, the company’s market value exceeded the combined value of the seven largest auto manufacturers that followed, bringing it on a par with market giants such as apple, Microsoft, Amazon, Google’s parent company alpha and Facebook.
Stock returns from May 21, 2019 to February 19, 2020
Let’s take a look at how Tesla entered the winner circle and how its rise is different from other companies in the S & P 500 index.
Tesla’s market value soared in the short term
In just 244 days, Tesla’s market value increased from $100 billion to $800 billion, which took much less time than other competitors. The 17 year old company has benefited from investors’ recognition of CEO Elon Musk’s vision for electric vehicles, which sees Tesla not only as a car manufacturer but also as a technology company. Optimism about the transformation of electric vehicles has driven the share prices of electric vehicle and battery manufacturers to new records in the past year.
Trading day for market value to increase from $100 billion to $800 billion
The Fed’s move also helped push more investors into the stock market and major stock indexes. The novel coronavirus pneumonia has cut interest rates and bought billions of dollars in bonds, resulting in a long-term bond yield close to zero while the return on other fixed income securities has returned to the level before the outbreak of the new crown pneumonia outbreak. Because bond yields are so low, investors tend to turn their money to riskier assets such as stocks.
Tesla took advantage of investors’ voracious appetite for its shares and sold billions of dollars of new shares last year.
Investors have become very optimistic
Wall Street’s favorite valuation indicator is forward P / E ratio, which can measure how high the price investors pay for a company’s stock is compared with its expected return.
Investors’ optimism about the outlook of many large technology stocks, such as Amazon, apple and Tesla, has helped boost their forward P / E ratios. The so-called high P / E ratio indicates that shareholders expect strong earnings growth beyond the company’s forecast period (usually one year).
Comparison of forward P / E ratio between Tesla and other technology giants
According to FactSet, Tesla’s share price is more than 184 times its expected earnings over the next 12 months. This is much higher than the average expected P / E ratio of the standard & Poor’s 500 index as of Wednesday’s close, with the average expected P / E ratio of its constituent companies being 22 times.
Musk said last year that he thought Tesla’s share price was too high. Recently, however, musk rationalized the valuation based on the company’s efforts to develop autonomous driving technology. This will make vehicles more useful and increase revenue, he said. “I think there’s a way to prove that the company’s current valuation is reasonable,” Musk said on the company’s fourth quarter 2020 earnings call in January
Tesla starts to make money
Comparison of annual net income between 2016 and 2020
Tesla has been at a loss for years as it invests in new models and capacity. Tesla’s turnaround came in 2020, when it ended the year with a profit of $721 million, its first full year profit. Although this is an important milestone for Tesla, it is still dwarfed by the tens of billions of dollars in net profits of companies such as alphabet, Microsoft and apple in recent years.
Tesla benefits from selling carbon credits to competitors who need to comply with emission related rules. Last year, the business had sales of about $1.6 billion, up from $594 million in 2019. ‘in the long run, carbon point sales won’t be an important part of the company’s business,’ Zach kirkhorn, Tesla’s chief financial officer, said in a recent earnings call.
Tesla goes all out to expand
Tesla’s future performance will largely depend on its ability to expand. The company delivered nearly 500000 vehicles to customers worldwide last year and plans to increase deliveries by an average of about 50% a year over the next few years.
Comparison of market value of each car between Tesla and other auto companies
Even with these increases, Tesla’s car production in the next few years will be far lower than that of other auto giants in the world. By contrast, Volkswagen, the German automaker, delivered about 9.3 million vehicles in 2020, and the established automakers are investing billions of dollars in developing their own plug-in models. GM said in January that it aims to phase out gasoline and diesel powered vehicles by 2035.
Demand for electric vehicles has also helped boost the share prices of start-up rivals such as Weilai. In the past year, the value of Weilai’s shares listed in New York has soared by about 1330%, making it the sixth highest car manufacturer in the world by market value. Last year, the company delivered just 43728 cars. (Tencent technology reviser / Jinlu)