Question

In: Finance

. Choose a company from the following list and comment on their market position. Your answer...

. Choose a company from the following list and comment on their market position. Your answer must be in essay format. Address the following issues in your answer:

• Choose any one of the following: Tesla, Amazon, Netflix, Zoom, Starbucks. You should get company information from either yahoo finance or WSJ markets.

• The P/E

• Is the stock expensive? Yes or No? Justify your answer

• How many years will it take to recover the investment if earnings remain the same?

• Will the stock price go up or down?

Solutions

Expert Solution

I am choosing the stock named Tesla.

Price to earning ratio of Tesla is 1163

Yes, this stock is highly expensive because that the company is not having any earnings and it is nearly running up on the cash flows so this company is trying to discount the futuristic profits at present

If the earnings is remaining the same then it will be taking more than five years to recover the investment because the company is having a higher amount of debt expenditure associated with it as this company is not able to generate consistent profits.

Currently the stock price is going up on the Euphoria and even it can go up to 1,000 but this price can never sustainable in the long run and this is going to crash to double digits when there will be synchronisation of the reality with fundamentals.


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