Tesla’s Valuation Trends before Its Model Y Event



Tesla’s valuation multiples

As of March 7, Tesla’s forward EV-to-EBITDA multiple was at 15.1x. This multiple was based on the company’s estimated EBITDA for the next 12 months. Over the last six months or so, TSLA’s forward EV-to-EBITDA multiple has fallen from 23.4x, and about a year ago it was much higher at 31.5x.

Article continues below advertisement

EV-to-sales multiples

Tesla’s forward EV-to-sales multiple was 2.0x as of March 7, lower than its 2.3x about six months ago and 3.1x a year ago.

Despite the recent drop, Tesla’s valuation multiples were still much higher than the mainstream automakers’ (IYK). Currently, the EV-to-sales multiples for General Motors (GM), Ford (F), and Fiat Chrysler (FCAU) were 0.9x, 1.1x, and 0.2x, respectively. Chinese electric carmaker NIO’s (NIO) EV-to-sales multiple was 2.3x, slightly higher than Tesla’s multiple.

But TSLA shouldn’t be valued using the same metrics as these legacy auto companies due to differences in business model and size.

Tech giants Apple (AAPL) and Amazon’s (AMZN) EV-to-sales were at 3.2x and 2.8x, respectively.

Key factors to watch for at the Model Y event

Over the last couple of quarters, Tesla has managed to remain profitable. However, while launching its lower-priced Model 3 in February, the company said that it doesn’t expect to be profitable in the first quarter.

The Model Y event will be closely watched by analysts and Tesla investors as the lower-priced electric SUV could play an important role in the company’s future growth. Strong demand for the Model Y depends significantly on the specifications Tesla reveals on March 14. Also, the Model Y production and delivery schedules are likely to have an impact on the company’s future earnings growth estimates.

Read on to the next part of this series to see Wall Street analysts’ recommendations for Tesla stock.


More From Market Realist