Tesla’s Valuation Multiples before Semi Truck Unveiling


Nov. 15 2017, Updated 7:31 a.m. ET

Forward valuation

Previously in this series, we saw what Wall Street analysts are expecting from Tesla Motors’ (TSLA) electric semi truck, which is scheduled to be unveiled on November 16, 2017. Some top analysts are expecting the semi truck to be a game changer in the trucking industry.

Let’s take a look now at Tesla’s valuation multiples.

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Tesla’s forward valuation multiples

As of November 10, 2017, Tesla’s forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple was 35.1x. The valuation multiple is based on TSLA’s estimated EBITDA for the next 12 months.

At the same time, the company’s forward EV-to-sales multiple was 3.1x. It’s worth noting that Tesla’s valuation multiples are significantly higher than those of legacy auto companies General Motors (GM), Toyota (TM), and Ford (F).

Tesla’s high valuation multiples have been questioned by many analysts on many occasions. However, many believe that Tesla shouldn’t be valued using the same metrics as those used for other legacy auto companies (IYK).

What to watch going forward

At the initial stage, Tesla is a growth company, unlike other legacy auto companies with proven track records. In the case of a new company like Tesla, growth matters the most.

Key factors such as the company’s ability to showcase high growth in revenues and profits could continue to drive Tesla’s forward earnings growth estimates higher. That could also drive its valuation multiples in the coming quarters.

Investors might still be focusing on the production rate and any positive news for Tesla’s Model 3. A positive response to the company’s semi truck could drive long-term growth for Tesla.

Next, let’s see what Wall Street analysts are recommending for Tesla stock ahead of the semi truck unveiling event.


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