Tesla, Inc. (TSLA) ‘s market capitalization currently stands at over $567 billion, making it one of the most valuable companies globally. This value represents the total worth of all outstanding shares of stock multiplied by the current share price. However, assessing whether this market capitalization is justified based on Tesla’s financial fundamentals is crucial.
We can utilize the market capitalization test tool to assess Tesla’s market capitalization. This tool compares a company’s market value to its future earnings potential to determine if the current stock price is reasonable. Let’s analyze Tesla’s market capitalization in relation to its revenues and earnings.
Based on recent financial reports, Tesla generated trailing twelve months (ttm) revenues of approximately $94.75 billion. With a current share price of around $177.48, the company boasts a price-to-sales ratio of about 6.02 – a relatively high figure compared to industry averages. However, it’s important to note that this ratio doesn’t provide the complete picture as it doesn’t consider profitability or growth potential.
To evaluate Tesla’s profitability and growth potential, let’s examine its net income and earnings per share (EPS). During the same period, Tesla reported net income available to common stockholders of about $13.65 billion and EPS of $3.90. These figures indicate that Tesla is yielding significant profits despite its high revenue and substantial market capitalization.
Now, let’s consider the kind of return investors might expect from their investment in Tesla based on its current market capitalization and financial performance. For example, if an investor aims for a 3.7% annual return (similar to Apple’s current earnings yield), Tesla would need to generate approximately $20 billion in annual net profits to meet this expectation with its current market cap of over $567 billion (assuming a PE ratio of 27). Achieving this level of profitability would require significant growth in both revenue and profit margins over the next few years – potentially doubling or even quadrupling its current revenues while increasing profit margins from their current level of around 14%.
For further information about Tesla Stock Market Cap, please visit marketcap.tools/tesla-inc.