Electric car manufacturer Tesla Inc (NASDAQ:TSLA) has often been regarded as one of the most innovative companies in the world and this year; TSLA stock has performed impressively despite the overall turmoil in the wider market. While big-ticket car manufacturers have seen their stocks nosedive this year, the Tesla stock has surged by as much as 73% so far this year.
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Many experts, however, assert that Tesla is less of an automobile stock and more a tech stock. Hence, it is important to figure out whether Tesla is a tech stock masquerading as an automobile stock.
At this point in time, Tesla has an enterprise value to the tune of $143 billion, and that is roughly at the midpoint of the enterprise value of General Motors and Ford. GM has an enterprise value of $120 billion, while the same for Ford is $154 billion.
That being said, both those automobile giants have trailing revenues, which are six times that of Teslas. The Tesla stock enjoys rich valuations due to the remarkable growth it has enjoyed. However, at the same time, it should also be noted that the company’s gross margins have gone down over the past three years or so.
While many might say that Tesla is a lot like tech giant Apple, it should be noted that the latter generated gross margins of 37.6% last year. Tesla, on the other hand, had gross margins of 16.6%. Tesla, like Apple, sells hardware, but the latter manages to produce much higher margins, and as of now, it is hard to make a comparison between the two stocks.
Investors may be bullish on TSLA stock, and in recent times, the stock has repaid the faith of the bulls. However, simply because it is a tech-focussed company and trades at rich valuations, it does not make Tesla stock the same as Apple, for now.