STOCK VALUATION-2

Trident University International

Donica Jordan-Andrade

Module 1 SLP: Tesla Inc. vs. Workhorse Group Inc.

FIN501: Strategic Corporate Finance

Professor: Dr. Edward Kaplan

November 29, 2020

Tesla Inc.

Tesla Inc., is an electric vehicle manufacturer founded 2003 and based in California, US. It is also involved in the manufacture of machines that use clean energy. This company is intriguing solely because of its mission to bring clean energy use to the world. With the rising concerns of climate change, most of the world's population will adopt clean energy automobiles. The company is quickly expanding to the rest of the world markets with its newest models that use electricity. I find that investing in the company right now is advantageous as the dividends in the future may be suitable as the company evolves.

Tesla presents a beta of 1.97. Relatively, this is a high value given that, on average beta, the value should be at 1.0. This magnitude indicates that Tesla is a slightly high-risk investment option or has a high return potential. In terms of stock movement, numbers show that the company has had relatively non-uniform or no gradual stock price movements over the last year. The company has a high of 500.14 and lows of 440.11. However, the closing price was 498.32. Hence, there was a small deviation between the high and low, which tells that the stocks will trade relatively around this figure, which means that the company stocks will trade high.

Reviewing the last five years, the company (Tesla) has performed relatively well. It had a high of 508.61 and a low of 404.09. However, the most riveting fact was that its close was 499.27, showing that there had been a minimal deviation from the high. For Tesla, this is a positive record of trading their stocks at such a high value during the five years. Therefore, the company stocks are less risky and profitable to invest with (Fong, 2014).

In comparison to Tesla Inc., there is a similar company called Workhorse Group Inc. Workhorse Inc., is also an electric vehicle manufacturer based out of Ohio, US, whose mission coincides with that of Tesla.

Workhorse Group Inc.

During the last year, Workhorse Group Inc. recorded a high of 30.88 and a low of 28.05. This company has maintained a minimal range between its high and low, a sign of stability, showing that it is less risky. However, the stock prices are much lower than that of Tesla. The dividends translate to low amounts as well.

In its five-year term, Workhorse Group Inc. seems to have held steadily at a high of 30.88 and a low of 22.84; which has shown a slight increase over the five-year period. In this instance, the company registered the most considerable difference between the values. However, it recently closed with a high of 30.66, which is a good indicator of less riskiness with meager returns. The value of Beta for Workhorse was 3.33. This value is too high and is a relative indication of how risky this company is to invest in (Ghayur, Heaney, & Platt, 2019).

References

Fong, W. M. (2014). The lottery mindset: Investors, gambling, and the stock market. Basingstoke: Palgrave Macmillan.

Ghayur, K., Heaney, R. G., & Platt, S. C. (2019). Equity smart beta and factor investing for practitioners.