Under The Spotlight

Under The Spotlight

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  • Driven by price cuts driving sales, Tesla Inc. has witnessed a remarkable increase of $550 billion in its market value this year, with investors disregarding the impact of shrinking profit margins.
  • When the electric vehicle-maker reports earnings on Wednesday, Wall Street analysts expected its automotive gross margin to come in at around 20% (a drop from around 28% in the same period a year ago), according to the average of estimates compiled by Bloomberg. That would be .

Why it matters

Despite benefiting from significant sales growth due to substantial price reductions, Tesla has faced challenges regarding its profitability. The disparity in stock valuation becomes apparent when comparing Tesla's forward earnings multiple of 70 times with General Motors Co.'s approximately 5.8 times and Ford Motor Co.'s approximately 8 times.


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