CIO reports that Tesla could still be down more than 60% even if it is valued at a traditional automaker like Ford and General Motors.

2021 Ford Mustang Mach-E.Tim Levin/Insider
Tesla is valued at eight times the value of Ford and General Motors, despite making fewer vehicles.

Is Tesla to be valued as a traditional automaker or as a tech company.

This question has been the focus of an extensive debate over the years between investors and skeptics about the electric vehicle manufacturer. Bullish investors have focused on Tesla’s EV innovation, self driving tech, and forays into energy storage to show why Tesla is a superior value than traditional automakers.

One thing is certain: Tesla, if it ever becomes a valued company like Ford or General Motors will have a lot of room to fall according to Greenwich Wealth Management chief investor officer Vahan Janjigian.

CNBC spoke to him Wednesday, saying that Tesla’s value is still eight times greater than Ford or General Motors, despite the fact that Tesla sells fewer cars per year.

General Motors and Ford have market caps of around $45 billion each, while Tesla’s is just over $380 billion. Despite Tesla losing more than $700billion in market value due to concerns over Elon Musk’s commitment to the company’s time, it is still worth more that the four largest auto companies.

“Tesla, despite the plunge in price this year, I still believe is tremendously overvalued. Tesla should sell at a higher multiple than Ford and General Motors because it has better growth prospects and is the leader in the EV market. Janjigian stated that this multiple was too high.

Tesla trades at 21x forward P/E, which is 6x and 5x for Ford and General Motors. Ferrari is the only major auto company with a higher valuation than Tesla. This is due to its focus of selling luxury cars at a high price.

Janjigian believes that Tesla could be valued more like other automaker peers by investors, while still maintaining a substantial premium because of its rapid growth rate and technological innovation. This would make the company’s value plummet even further.

Tesla currently sells approximately 1 million cars annually. This number will continue to rise. Ford is currently selling between 5 and 6 million cars a year. Tesla is likely to surpass Ford. Therefore, I believe it should be worth at most twice the Ford price, possibly even three times as Ford. But 8x the price of Ford? Janjigian stated that he thinks it’s too high.

Tesla would be worth $135 Billion if it fell to a value three times that of Ford. This would be a drop of 65% from current levels and an 89% decrease from Tesla’s peak valuation of $1.2 trillion.

“Are they going be the only automobile seller in the world?” Do they intend to take out all other car manufacturers? They should be valued more if that is the case. Ford also makes EVs. GM is also making EVs. Every manufacturer is now trying to grow their electric vehicle business. They have many years of experience behind them… so I believe that they will eventually catch Tesla,” Janjigian stated.

Business Insider has the original article.
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By: mfox@businessinsider.com (Matthew Fox)
Title: Tesla could still fall more than 60% if it’s valued as a traditional automaker like Ford or General Motors, CIO says
Sourced From: markets.businessinsider.com/news/stocks/tesla-stock-price-traditional-automakers-valuation-ford-general-motors-gm-2023-1
Published Date: Mon, 02 Jan 2023 13:30:00 +0000