Elon Musk believes that one day Tesla Inc. will be worth more than both Apple Inc. and Saudi Aramco put together. Stock market investors are warning against haste. On Wednesday, the electric vehicle manufacturer revealed dismal results for the third quarter, with revenue and margins falling short of projections despite a profit beat.
Bloomberg’s figures suggest that this is the first quarter since the third quarter of 2021 when the corporation has failed to meet revenue expectations. Musk, CEO, added that demand was “a touch harder than it would normally be” because of slowdowns in China and Europe.
Multiple analysts lowered their price target on the firm on Thursday as a result of the results and the cautious outlook on demand. According to Bloomberg information, the average price objective for the business is $293, which is more than 40% higher than the stock’s finish on Thursday. The price at which Tesla stock finally settled was $207.28, a loss of 6.7%.
JPMorgan analyst Ryan Brinkman wrote in a note, “We remain cautious on valuation, especially in the context of ambitious unit volume growth assumptions, and continue to see meaningful downside risk to our December 2023 price target.” Having once been valued at $1 trillion, Tesla is now worth around $650 billion on the stock market. Compared to Saudi Aramco, which is worth about $2.1 trillion, Apple is worth $2.3 trillion.
Because it consists of billions of bidirectional interactions per day, Twitter can be thought of as a collective, cybernetic super-intelligence
— Elon Musk (@elonmusk) November 3, 2022
Investors are keeping a close eye on demand for luxury goods and large expenditures like cars during this earnings season as the US consumer feels the pinch from high inflation and swiftly rising interest rates. The market has been on edge for a while now after Tesla disclosed lower-than-expected shipments for the third quarter earlier this month.
Tesla’s high valuation is predicated mainly on the company’s expected future growth, making risks to demand a particularly worrisome problem. Compared to the S&P 500 Index, which trades at 18 times forward earnings, Tesla’s stock trades at 49 times forward earnings. As BofA analyst John Murphy pointed out to clients in a note, “Tesla stock is premised on a growth-valuation paradigm, for which access to low-cost capital is a vital input,” and the shares may already be properly priced, especially considering market volatility.
Though short-term valuation may be restrained due to global economic turbulence, persistent supply-chain, and logistical challenges, and high raw material prices, analysts have mainly maintained their bullish forecast for Tesla. Deutsche Bank analyst Emmanuel Rosner said, “While Tesla is not immune from a crisis, we believe its growth and profits could be far more resilient than the rest of the industry in a global recession.” Despite this, Rosner cut his price objective on Tesla stock from $390 to $355.
Elon Musk believes that one day Tesla Inc. will be worth more than both Apple Inc. and Saudi Aramco put together. Stock market investors are warning against haste. What do you think about this? Do share your reviews with us in the below section. Also, mark our website Smartnewszone.com for more such updates.