Elon Musk is counting on full-self driving and other new technologies and vehicles at Tesla Inc. continue to drive the electric carmaker’s value far beyond its automotive rivals.
Some analysts and investors worry that Tesla’s industry-leading market valuation is threatened by factors including price cuts that have undermined its margins, delays in rolling out new models and revisions to its full self-driving software.
“Tesla faces an increasingly uphill battle to secure its competitive position, which makes its current valuation look even more unrealistic,” said David Trainer, CEO of investment research firm New Constructs. “The Tesla bull case has centered around the company’s growth goals, which it is failing to meet.”
Tesla’s stock, which dropped 9.75 percent to $162.99 on Thursday, is valued at about 43 times expected earnings, down from astronomical levels above 200 times in 2021, according to Refinitiv data. Even after that drop, the company’s valuation remains several times higher than the multiples of legacy carmakers, with Ford Motor Co, trading at about 8 times expected earnings and General Motors Co. trading at under 6.
Tesla on Wednesday doubled down on the price war it started at the end of last year, as Musk said the company would prioritize sales growth ahead of profit. In the first quarter, Tesla posted its lowest quarterly gross profit margin in two years.
