Oct. 23, 2023 11:10 AM ET Tesla, Inc. (TSLA)
- Tesla, Inc.'s forward earnings ratios have increased, reversing the previous trend of lower ratio estimates.
- Earnings yields for both GAAP and non-GAAP earnings have fallen, which is concerning in a rising interest rate environment. Growth is stalling in the face of a weakening consumer.
- We consider whether adjusting for R&D can provide a more positive outlook for Tesla's earnings.
The article discusses Tesla, Inc. and its current financial outlook, highlighting several key points:
- Changing Earnings Ratios: Tesla's forward earnings ratios have recently increased, reversing the previous trend of lower ratio estimates.
- Falling Earnings Yields: Both GAAP and non-GAAP earnings yields have fallen, which is concerning, especially in a rising interest rate environment. This indicates that the company's growth is stalling, and it may face challenges due to a weakening consumer.
- Adjusting for R&D: The article explores whether adjusting for research and development (R&D) expenses can provide a more positive outlook for Tesla's earnings. The adjusted model suggests a fair share price for Tesla.
- Advantage Over Competition: Tesla's advantage over traditional automakers is highlighted, including its ability to raise equity and finance growth at a minimal cost.
- Growth Outlook: The article points out that Tesla's growth story is receding, and it emphasizes the importance of not assuming unrealistic growth rates in perpetuity. Despite the challenges, Tesla remains well-positioned for future growth.
- Concerns for the Auto Industry: The article discusses potential risks to the entire auto industry, including the possibility of an automaker bailout and the impact on credit markets.
