We expect Tesla’s Long-Term Growth

Tesla (NASDAQ: TSLA) is an innovative company that has a wealth of know-how in battery technology and automated driving technology, and is leading the electric vehicle (EV) industry.

Comparing Tesla’s quarterly stock price rise and revenue growth over the last five years, the stock price rise until 2019 Q3 has a relatively strong correlation with the preceding quarterly revenue’s growth, while operating income growth does not substantially have correlation with the stock price rise.

Fig.1 Relationship between Tesla’s stock price rise and revenue growth

In addition, Tesla has been releasing EBITDA in its earning results since 2019 Q2. We found that at least Tesla’s stock price rise since 2020 Q1 has a strong correlation with the preceding quarterly adjusted EBITDA’s growth.

Fig.2 Relationship between Tesla’s stock price rise and adjusted EBITDA’s growth since 2020 Q1

We believe that Tesla’s recent surge in stock price has been in line with Tesla’s adjusted EBTDA’s growth, and Tesla’s stock price could rise further in response to revenue growth and adjusted EBITDA’s growth.

In this regard, Tesla has relatively higher ratio of depreciation and amortization among total revenue compared to the other automakers, and Tesla is still building several mega plants around the world. In addition, Tesla is trying to conduct cost savings and EV’s price reductions through bold streamlining its manufacturing line, and if total asset turnover and operating margin will be improved by such efforts, both revenues and adjusted EBITDA would drastically be improved.

Fig.3 Tesla’s depreciation and amortization ratio since 2019 Q2 and its comparison with other automakers

Watanabe & Brothers’ Investment expects Tesla’s  continuous growth and we will invest in Tesla from a long-term perspective.

Stock Analysis Report of Tesla

Tesla, Inc. (NASDAQ: TSLA) Stock Chart

Important Notice 

  1. Watanabe & Brothers’ Investment is holding shares of Tesla.
  2. This report is provided solely for informational purpose and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell any specific products. 
  3. Any opinions or statements expressed in this report are based on the author’s personal and subjective views, and are not the official views of the organization to which the author belongs.  In addition, although we have done our best efforts in making accurate assessments on the original financial statements, we cannot guarantee any complete accuracy of this report. We do not guarantee either that any future forecasts referred to in this report will certainly be realized. Investment in listed stocks, ETFs, etc. should be carried out under the responsibility of each investor, and even if the investor who read this report suffers a loss due to investment activities, Watanabe & Brothers’  Investment is not responsible for any liability.
  4. This report was originally prepared in English, and translated into the other languages with plugin utilizing Google Translation API. We hereby notify that the translations are provided only for the sake of reference, and any opinions or statements in this report should be interpreted in original English. We ask any investors reading this report to refer to the original financial statements issued by the company.

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