Tesla Posts Record Quarterly Profit of $1.6 Billion

Tesla Stock

Elon Musk is a controversial figure – but Tesla (TSLA), the electric vehicle (EV) pioneer he founded in California in 2003, is doing better than ever. Tesla recently posted figures from its most prosperous quarter ever despite a global chip crisis and supply bottlenecks.

Quarterly Profit Rises 389% 

Year-over-year, Tesla’s Q3 profit rose 389% to $1.6 billion. Revenue, after all, grew 57% to $13.8 billion. What’s interesting is that despite the pandemic, not only did sales and production numbers increase, but so did profitability.

Tesla’s CFO Zachary Kirkhorn has every reason to be happy. “Our company made important progress in achieving all relevant financial metrics in the third quarter. Overall, we delivered more than 240,000 vehicles, up 20% from last quarter and up more than 70% from the same quarter last year.”

Analysts Disagree on Tesla’s Future

Tesla has thus presented the best results in its corporate history, significantly exceeding analysts’ expectations. But analysts don’t agree at all on what to make of Tesla’s stock, as you can see from this chart. 

While 16 analysts continue to rate the stock as a buy, three advise an underweight, which is nothing more than a hidden sell recommendation, and eight analysts advise a sell.

The average analyst price target, moreover, is $764, well below the current price. By the way, the highest analyst price target is $1,591 – and there are also analysts who consider a price target of $67 for Tesla to be appropriate. Honestly, I have almost never seen such a wide range of price targets.

Tesla is Clearly Overvalued

Looking at 2022 earnings estimates, Tesla has a forward P/E ratio of 110. Its trailing-twelve-month P/E ratio is 152. 

Just for comparison, let’s look at the earnings estimate for 2022 of the Daimler Group (DMLRY). They have more breadth, a forward P/E ratio of 7.3, and offer a rich dividend yield of 1.62%. Tesla pays no dividend at all.

While the global auto industry has been suffering from the semiconductor shortage and other supply bottlenecks for months, Tesla is weathering the crisis well. That said, the stock has been trading above the average analyst price target for some time; it’s clearly overvalued.

Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.
Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.

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