- Tesla’s current P/E ratio stands at 69.35, significantly lower than its four-year average of 299.96, but still remarkably high by conventional standards.
- The company’s P/E ratio hit its peak at an almost surreal 940.89 in December 2020, before plummeting to its lowest at 30.64 in December 2022.
- Tesla’s erratic and volatile valuations represent a substantial risk to investors, yet its unprecedented growth has also generated massive returns for early backers.
Hey there, fellow pioneers! It’s your friend Peter Burke coming at you with the scoop on Tesla. Let’s get our heads around this wild ride of a company.
You’ve likely heard of Tesla – it’s hard not to, right? They make those fancy electric cars and are led by Elon Musk, who’s as well-known for his social media antics as his business ventures. But when it comes to the financials, Tesla’s been making waves in a big way. Some might even say it’s been creating tsunamis.
Let’s break it down: Tesla’s Price-to-Earnings (P/E) ratio – a measure investors use to figure out if a stock is over or underpriced – is currently at 69.35. Now that might sound pretty high, and it is when you compare it to most companies. But here’s the kicker: Tesla’s average P/E over the last four years was a whopping 299.96! We’re talking nosebleed territory here, folks.
So why the big drop from the average? Well, Tesla’s P/E ratio has been on a rollercoaster. It hit a dizzying high of 940.89 in the last quarter of 2020, when folks were paying $235.22 per share for earnings of only $0.25 per share. Then, it hit a low of 30.64 in December 2022.
Now, I hear you asking, “Peter, why should I care about all these numbers?” Well, because they’re a sign of risk. High P/E ratios mean that investors are paying a lot for a small slice of the company’s earnings. They’re betting big that Tesla will keep growing fast. But as we’ve seen, that P/E ratio can swing wildly, and if you buy in at the wrong time, you could end up losing out.
But here’s the thing, pioneers: despite this risk, Tesla’s made a lot of folks a heap of money. Those who got in early and stuck around through the ups and downs have seen some serious returns. It’s not everyday that a company grows as fast as Tesla has.
So, should you rush out and buy Tesla shares? As always, I say do your homework first. High P/E ratios can be a sign of overvaluation, but they can also signal high growth. If you think Tesla’s growth story isn’t over yet, and you’re willing to ride out the ups and downs, it might be worth a look. But remember, don’t bet more than you can afford to lose. In the world of investing, there’s no such thing as a sure thing.
Link to fullratio.com for Tesla PE Breakdown Data
