Tesla (TSLA) has had a terrible start to 2024, losing more than a third of its value. But Tesla stock hasn’t become significantly cheaper, by a key metric.
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Often when a stock sells off hard, investors and Wall Street analysts will tout it as a buy, citing much-cheaper valuations.
Tesla stock is down 34.2% this year, the worst performer on the S&P 500. Shares are 60.5% below their late 2021 all-time high. But Tesla has largely tracked declining earnings estimates amid weaker-than-expected deliveries despite ongoing price cuts.
Tesla Stock Valuation
| Date | Tesla stock price | 2024 EPS estimate | 2024 P-E ratio | 2025 EPS estimate | 2025 P-E ratio |
|---|---|---|---|---|---|
| Dec. 30, 2022 | 123.18 | $7.07 | 17.4 | $7.93 | 15.5 |
| March 31, 2023 | 207.46 | $5.62 | 36.9 | $6.95 | 29.8 |
| Sept. 29. 2023 | 250.22 | $4.68 | 53.5 | $6.21 | 40.3 |
| Oct. 31, 2023 | 200.84 | $3.93 | 51.1 | $5.54 | 36.2 |
| Nov. 30, 2023 | 240.08 | $3.85 | 62.3 | $5.40 | 44.5 |
| Dec. 29, 2023 | 248.48 | $3.79 | 65.5 | $5.27 | 47.2 |
| Jan. 31, 2024 | 187.29 | $3.14 | 59.7 | $4.38 | 42.8 |
| Feb. 29, 2024 | 201.88 | $3.10 | 65.2 | $4.25 | 47.5 |
| March 15, 2024 | 163.57 | $2.97 | 55 | $4.06 | 40.2 |
| 2.62* | 62.4 | ||||
| *Sharp consensus of recent analyst forecasts |
Source: FactSet
Analysts have cut their 2024 earnings per share targets to $2.97 a share, according to FactSet, down from $3.79 at the end of 2023, $5.62 a share at the end of March 2023 and a whopping $7.07 at the end of 2022.
So the forward price-earnings ratio for Tesla stock is 55.0 as of March 15. That is down from 65.2 on Feb. 29 and 65.5 at the end of last year, but it’s above where it was on Sept. 30. It’s well above the 2024 P-E ratio of 36.9 from back on March 31, let alone the 17.4 P-E ratio at the end of 2022.
Furthermore, a number of analysts have slashed Tesla earnings estimates in the past week or so. FactSet’s “sharp consensus” of more-recent estimates is for 2024 EPS of $2.62. At that level, Tesla’s 2024 P-E ratio is 62.4, in the upper half of its range for the past several months.
The same trend holds for 2025. Analysts have cut Tesla earnings per share estimates for 2025 to $4.06 vs. $5.27 at the end of last year. (Notably, that is now below Tesla’s peak earnings of $4.07 a share in 2022.)
Analysts expected $6.95 on March 31, 2023 and $7.93 at the end of 2022. The 2025 P-E ratio for Tesla is now 40.2. That’s off from 47.5 on Feb. 29 and 47.2 on Dec. 29. But it’s roughly equal to the Sept. 29 reading of 40.3. It’s up substantially from the 2025 P-E ratio of 29.8 at the end of March 2023 and 15.5 at the end of 2022.
While FactSet doesn’t offer a 2025 earnings “sharp consensus,” recent analyst cuts suggest that next year’s EPS estimates will come down further.
Sharp or not, Tesla’s valuation is far above that of other profitable automakers. Toyota Motor (TM) has a forward P-E ratio of 9. General Motors (GM) has a forward P-E ratio of 4. Among EV players, fast-growing Li Auto (LI) has forward P-E ratio of 17. EV giant BYD (BYDDF), has a forward P-E ratio of 14.
Ferrari (RACE) is the only one close to Tesla, with a forward P-E of 50.
Investor’s Business Daily usually doesn’t focus on price-earnings ratios, because many leading stocks boast high valuations as investors bet on strong growth to justify them. During its huge run, Tesla was a growth company with high P-E ratios. But it’s not a growth company right now.
Tesla Stock Bull Case
Of course, to an increasing extent, the Tesla bull case is looking beyond 2025, with hopes for a next-generation small EV or even looking beyond electric vehicles. Some analysts, most famously Morgan Stanley’s Adam Jonas, ascribe the bulk of their Tesla stock price targets to outside of EVs and for big bets such as self-driving, robotics and artificial intelligence.
Clearly, much or even most of Tesla’s current market valuation is a bet that some of those moonshots will pay off down the road, delivering massive profits.
Whether or not they pay off is an open question.
But Tesla stock still isn’t cheap.
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