Tesla has experienced a significant decline in its stock value in 2024, with a drop of over a third since the beginning of the year. Despite this sharp decline, Tesla’s stock price hasn’t become notably cheaper based on key metrics.
The company’s shares are currently down 34.2% this year, making it the worst performer on the S&P 500. From its late 2021 peak, Tesla’s stock is now trading 60.5% lower. The decreasing stock value has been closely following a trend of declining earnings estimates, driven by lower-than-expected deliveries despite ongoing price reductions.
Analysts have revised their 2024 earnings per share predictions to $2.97, a notable decrease from previous estimates of $3.79 at the end of 2023 and $7.07 at the end of 2022. Consequently, Tesla’s forward price-earnings ratio stands at 55.0 as of March 15, indicating a reduction from previous figures but still above levels seen in previous periods.
Moreover, recent analyst cuts have led to further reductions in Tesla’s earnings estimates for both 2024 and 2025. For 2025, analysts now anticipate earnings per share of $4.06, below the previous peak of $4.07 in 2022. As a result, the 2025 price-earnings ratio for Tesla is currently at 40.2, showcasing a significant increase from earlier periods.
Despite the downward trend in earnings estimates, Tesla investors are focusing on the company’s future potential beyond 2025. Speculations about next-generation electric vehicles, self-driving technology, robotics, and artificial intelligence play a significant role in shaping Tesla’s market valuation and stock price targets.
While Tesla’s high valuations have been justified in the past by its growth prospects, the company is currently facing challenges in meeting earnings expectations. Investors are closely watching Tesla’s strategies and developments in innovative technologies to assess its long-term profitability and market position.
