Tesla's valuation is probably one of the most hotly debated topics in the stock market these past few years. Tesla is certainly richly valued, and sentiments like "Tesla has a higher market cap than all other automakers combined" or "Tesla has decades of growth priced in" are very prevalent, especially on this sub.
That said, I noticed a trend where - although lots of different people are saying this and people defending Tesla's market cap are often downvoted - the people who make this argument never use any numbers to back up their claims. So I figured it might be nice to have an objective look at Tesla's trends and projections, run the numbers, and see how richly valued Tesla really is.
For those who don't like reading, I will now explain how I got to my numbers. If you don't like reading, skip straight to "The Numbers"
The method
While trailing P/E numbers are generally quite meaningless for companies that are growing as fast as Tesla, we can extrapolate their current growth to determine what their trailing P/E would be in the next couple of years should their market cap not rise any further. Although their market cap has risen slightly higher, let's use a market cap of $1T to determine if Tesla really deserves to be a trillion dollar company.
The trends
In terms of revenue (LTM), Tesla has grown from $28,176M at the end of Q3 2020 to $46,848M at the end of Q3 2021. A 66% growth YoY.
In terms of operating margin, Tesla has grown from 9.2% in Q3 2020 to 14.6% in Q3 2021.
$Tesla Motors(TSLA)$
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