Tesla (NASDAQ: TSLA) appears to be a better pick compared to General Motors (NYSE: GM), even though TSLA stock trades at about 18.3x trailing revenues, while GM at 0.6x. So, how does this gap in valuation make sense? While the automotive sector has been heavily hampered by the pandemic with sales volume dropping exponentially, Tesla’s revenue grew by 28% in FY 2020. There is more to the comparison. Let’s step back to look at the fuller picture of the relative valuation of the two companies by looking at historical revenue growth as well as operating income and operating margin growth. Our dashboard General Motors vs. Tesla: GM stock looks undervalued compared to TSLA stock has more details on this. Parts of the analysis are summarized below.
1. Tesla’s Revenues Have Grown Exponentially
Tesla’s revenues grew 67% since 2018 to $35.9 billion over the last twelve month period. The sales growth has been led by the Model 3, which was the world’s best-selling all-electric vehicle model in 2020. Our Tesla’s Revenues dashboard summarizes the segment-wise breakup of the company’s revenues. Looking at GM’s Revenues, its total revenue over the last twelve months have fallen to $122 billion, compared to $147 billion in 2018 as the company lost its market share in regions across the world with United States being the exception. Looking forward, now that nearly half of the U.S. population is fully vaccinated for Covid-19, the overall economic activities are likely to move a step closer...
Read Full Story: https://www.forbes.com/sites/greatspeculations/2021/08/27/is-teslas-stock-a-better-bet-than-gm-stock/
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