- Results of Q4-2021 reported are released on Wednesday January. 26 after the market closed.
- Revenue Expectation: $16.88 billion
- EPS Expectation: $2.25
In the current quarter the electric automobile manufacturer Tesla’s (NASDAQ: TSLA) earnings growth might be pushed to the place in the background as its massive market cap gets a closer look. As the macro market environment shifts towards risks, the excessive valuations are becoming more risky.
Since the outbreak the world’s most EV-addicted producer has experienced a dramatic rise story. From early November last year the stocks of this Austin Texas-based company soared more than 1,000% in the two years preceding.
However, the prospect of higher interest rates together with Tesla’s CEO Elon Musk’s selling of shares of the company caused a major hit to Tesla to the core, taking away approximately 25% of the company’s gains since its November. 4 record-setting highest at $1,229.91.
Tesla Weekly Chart
Tesla has announced earlier in the month that its vehicle deliveries increased by 87% in 2021, despite the fact that the auto industry is suffering extreme shortages of semiconductors as well as other parts because of supply chain disruptions.
The electric carmaker also manufactured around 930,000 vehicles by 2021. The majority likely came from Shanghai, Credit Suisse estimated in the past.
In a statement that referred to Tesla being “overweight” this month, Morgan Stanley said that it does not see anyone else who could compete with its size. Tesla is expanding across three continents, and is nearing the finalization of new manufacturing facilities located in Austin, Texas, and Berlin.
High-Performance Bar
However, despite this positive outlook, Tesla’s capability to overcome bottlenecks in its supply chain that have slowed other companies also has its limitations according to our opinion. This is perhaps the primary reason why analysts aren’t expecting any significant increase for TSLA share prices in the near time.
Zachary Kirkhorn, the chief financial officer of the business In October, the company’s chief financial officer told investors:
span data-preserver-spaces=”true “>”[We are] trying to the best we can to boost this capacity in order to meet the ever-growing demand for vehicles running with renewable energy sources. The net result of this is that we’re unable to expand production speed enough.”
Based on an analysis by InvestingPro , Tesla shares are trading at a price-to-earnings multiple of 279; an amount which has raised the benchmark for performance so high that there’s no room for the company to be sloppy regarding the financial results.
Due to this expensive valuation, Tesla’s stock is a risky bet according to InvestingPro’s model which gives Tesla an $735.60 share fair value, which is a nearly 21% risk of a downside from its current value.
Tesla Fair Value Estimate
Source: InvestingPro
Analysts’ consensus estimate for Tesla stock provides a similar picture. In an Investing.com survey of 37 analysts 16 are rated the stock as an investment, while 11 see it to be a sell while the remainder are neutral.
Tesla Consensus Estimates
Chart: Investing.com
Bottom Line
Tesla is expected to deliver another impressive quarter after the company exceeded its vehicle delivery goal during the fourth quarter of last year’s. But continuing supply-chain constraints and concerns about the stock’s sky-high valuation may keep investors on the sidelines–especially when growth stocks in general are going through a major correction.
