SLP BUDGETING- 3

Module 2 SLP Assignment: Tesla's Stock Market Analysis

Date

Tesla's Stock Market Analysis

The P/E

The price to earnings ratio is the valuation of a company's current share price relative to its per-share earnings. It is calculated by dividing the market value per share by earnings per share. The value arrived shows the stock price is likely to grow in the future, and with this amount of times. Indicates that the company is willing to pay investors in the future.

Looking at P/E for Tesla, trailing-twelve-months P/E of 93.89X from stocks. When this is compared to Workhorse Group Inc., WKHS has not disclosed its P/E values publicly. However, for Tesla, the value is so high that it is likely to show that the company may not be willing to pay its investors because the future stock prices will be so high whereby it is trailing at 94times. This indicates that the value of Tesla is overvalued as the industry's general is following at 27X. This is another reason why investors may find it very difficult to invest in Tesla.

An overvalued stock is likely to disappoint the investors since they cannot determine the actual performance, hence gauge their likelihood of returns or dividends (Damodaran & John Wiley & Sons., 2011).

The book values of each share

Tesla had total assets amounting to $ 34,309 million as of 30 December 2019. The total liabilities as of the same date amounted to $ 26,842 million. The difference between the assets and the liabilities is $7467 million. Looking at Tesla's outstanding shares from its 2019 annual report, the company does not report any outstanding shares, thus making it very difficult for investors to be in a position to calculate its book value for each share.

Going by this, then investors will not be able to identify the correct valuation of the company. What is likely to come into their minds is that the company is overvalued; hence realizing dividends from an investment in the company is very difficult.

Analyst's Opinions on Tesla

When thinking about investing, doing thorough research on stock options is very important. Investors have the knowledge and the ability to make a first-hand analysis of the profitability of their investments. On the other hand, there are professionals out there who are good at offering expert advice on which stocks are best to invest in and during which period. After comparing own findings and the expert advice, an individual can weigh which investment options are best suitable to invest in. about investing in Tesla, the information found below validates why the stocks are a good bet.

In the US News article, Should You Buy Tesla (TSLA) Stock? Analyst Garrett Nelson of CFRA Research states that Tesla is the best way to invest. This is because the company has a portfolio of the unusual following of millennials and retail investors. The company has posted massive improvements compared to other companies; thus, it was added to the S&P 500 index. Looking at how the company trades, it is trading like a tech firm with exponential growth. The company has made profits in four consecutive quarters surpassing many companies that have earned it recognition in the stock markets.

Looking at the information found in Market Watch's article, Now that Tesla is joining the S&P 500, you might want to sell. It is, therefore, suitable to decide that presently, investing in Tesla is a profitable affair. However, market conditions change, based on historical performance, the company will be more beneficial in the long run.

References

Damodaran, A., & John Wiley & Sons. (2011). The little book of valuation: How to value a company picks a stock, and profit. Hoboken: John Wiley & Sons.

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

Kron, J. (2020). Should You Buy Tesla (TSLA) Stock?. Retrieved 5 December 2020, from https://money.usnews.com/investing/stock-market-news/articles/tesla-inc-tsla-stock

Reeves, J. (2020). Now that Tesla is joining the S&P 500, you might want to sell. Retrieved 5 December 2020, from https://www.marketwatch.com/story/now-that-tesla-is-joining-the-s-p-500-should-you-buy-or-sell-11605631506