Even though the COVID-19 pandemic hit the automobile industry really hard, Tesla seems to have emerged as one of the few winners as the end of the pandemic seems to draw nearer even though there is still much to be done. The Tesla’s stoke has been surging and the valuation has reached a new high with the company amassing a whooping 7% increase today alone after adding 20% over the past week.
With that, a huge US$100 billion has been added in the company’s market capitalization over such short period of time which now put the company’s market cap at a staggering US$497 billion.
For comparison, that’s more than Toyota, Volkswagen, and BYD, the three next biggest automakers, combined. The diagram below shed more light into this.
Even as at May, Elon Musk, Tesla CEO complained complained about how high his company’s share price was wiping out billions of dollars worth of the company’s valuation.
And as at that time, Tesla’s trading was at the equivalent of ~US$150 after the 1 to 5 stock split. But the table seems to have turned in Tesla’s favor after making the comment as the first wave of the coronavirus pandemic caused the stock market crash.
But afterwards, Tesla’s stock has been one of the best performing stock despite the pandemic. The sales of Tesla cars wasn’t totally hit by the pandemic and so it as easier for it to quickly returned to growth where it left off.
However, the valuation is hard to justify because if we’re to consider Tesla’s last quarter, the company has an annualized revenue of $35 billion. Therefore, it is trading at 14 times its annual revenue.
As for the price-earnings ratio, that’s closer to 1,000 times — something that would make most fundamental investors cringe.