Published
12/04/2024, 13:05On December 2, Tesla shares approached the record value set in November 2021 (when the stock traded at nearly $382). On Monday, trading opened with an increased price compared to previous transactions – $352.38 per share, and by the close the value had risen to $357.09. The maximum price of the shares at trading on December 2 reached $359.99.
The material is not a call to purchase Tesla shares or any other financial instruments. Royal Inc. analysts’ estimates regarding the growth of the share’s profitability and its undervaluation are based on forecasts. The stock market is subject to various factors, including economic, political and market risks, which can lead to unpredictable outcomes. Therefore, all decisions on shares acquisition should be made by the investor independently taking into account possible risks and own financial position.
The trading session ended with 1.34% increase from the opening price and a 3.46% rise from the previous closing price (November 29, when the cost of the shares was $345.16).
The rise in Tesla’s stock, continuing in December, began back in November. It is explained by a combination of political and market factors. In particular, Tesla shares increased in price by 14% following Donald Trump’s victory. The market anticipates that Tesla, led by Elon Musk, to be a key beneficiary due to potential tax breaks and removal of regulatory barriers. These assumptions are bolstered by the fact that Musk has openly supported Trump, as well as rumors of his possible involvement in the new president’s administration. This strengthens investor confidence in Musk.
Despite Trump’s criticism of subsidies for electric vehicles, Tesla's significant production scale allows it to strengthen its position, even in the absence of incentives, against less competitive players. Also, increased tariffs on Chinese cars could reduce competition from brands like BYD and Nio, which plays into Tesla’s hands.
Today, it's easy to make positive projections amid the company's rising shares. However, five months ago, in June, Ruslan Idyrov, the chief analyst at the Royal Inc. Investment Company, noted the promising prospects of Tesla shares.
In his investment review “What does Elon Musk keep silent about?”, he emphasized that Tesla is a financially stable company with high potential, although the growth rate of the share value is inferior to historical indicators.
Tesla ranks first among electric vehicle manufacturers with a market share of about 18%. In the overall segment, including hybrids, the company ranks second with a 12.7% share. Tesla's revenue has shown steady growth since 2010. The average annual growth over the last few years has been about 51%, which indicates a high dynamic.
The primary source of the company's revenue - 94% - comes from the automotive sector, while the remaining 6% comes from energy production and storage. The company has total assets of $107 billion, of which 27% are cash and 42% are fixed assets. Liabilities account for 40% of assets, indicating a balanced financial position.
Tesla's revenue geography is diversified: 47% of its profits generated in the US, 22% in China, and 31% in the rest of the world.
"Currently, Tesla's share in global electric vehicle sales is about 12.7%. The EV Volumes analytics platform predicts that global electric vehicle sales will reach 46 million units by 2030. If Tesla maintains its current market share, it will be able to sell 5.9 million vehicles.
At an average price per car of $53.465, the company's revenue would total $313.8 billion. With a profit margin of 15%, earnings per share will reach $14.78. Given the current P/E ratio of 39 (the ratio of market price of the share to net income per share), the price of the share in 2030 would be $576. With a discount rate of 5.5%, the current value of the securities would be $396,” Ruslan Idyrov believes.
