Pole position in the electric-vehicle business and a high valuation means Tesla Inc. needs to deliver a blowout quarter to reclaim its trillion-dollar market value. Picture: BLOOMBERG
Tesla’s estimate-beating production and delivery numbers have helped boost its projected revenue growth to 46% in 2022, a far cry from the 20% for General Motors and 15% for Ford. The problem is, even after the stock slumped 25% from its November record, Tesla’s dizzying market capitalisation of over $945bn is more than 10 times that of the 100-plus year old Detroit giants.
The broader meltdown in high-growth stocks, spurred by the Federal Reserve’s hawkish stance on monetary policy, adds to the headache for Tesla, which trades at 94 times forward earnings — among the 10 most expensive members of the S&P 500 Index. Moreover, the spectre of aggressive competition could hurt its pricing power as GM, Ford and new entrants such as Rivian Automotive roll out more electric vehicles.
Even strong fourth-quarter numbers could go only so far in soothing investors’ nervousness about the stock, given its 27,000% run since Tesla went public in 2010. Tesla shares jumped as much as 4.2% on Wednesday in New York, ahead of the results after the market close. The stock had retreated nearly 15% in three prior sessions.