Tesla which was founded just a decade ago, has recently become the most valuable car company...

Tesla which was founded just a decade ago, has recently become the most valuable car company in the world. Look up the most common valuation metrics for TSLA (P/E, Book-to-Market, Price-to-Sales and other ratio) and compare them to that of the industry peers.

How overvalued is TSLA relative to its peers?

Why would investors buy such an overvalued company?

Would you personally invest in TSLA?

Would you buy one of its vehicles?

Solutions

Expert Solution

Price of Tesla is reflecting that the tesla is having a very high premium over its peers but that can be justified through having an opinion that this company is software company rather than an automobile company so this company is continuously developing new technologies and it is expected to lead this particular segment by being a software oriented company and focusing upon the electronic car making only.

price to earning ratio of Tesla has been above 1000 along with book to market and price to sales ratio have been more higher than any of the Other global player in automobile sector because this company has been excessively valued by the investor for its premium segment in in electronic car making and the leadership which it has in electronic car making.

I think Tesla is highly overvalued in relation to its peers because traditionally auto maker companies are trading at a price to earning ratio of 20 but this company has shown a price to earning ratio of more than thousand and this company is even not continuously making profits but the market is irrational exuberant and it is reflecting in the prices

investor will buy into Such an overvalued company because they believe in the story that this company is going to provide with its exceptional leadership in future and it is going to acquire more of the market share whereas I will be refraining from buying it at this valuation because for me only undervalued shares make to the list

Yes, I can buy one of its vehicles because they can provide me value for money, not the stocks.

jeff jeffy answered 1 year ago

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