Tesla is a car. It’s also a company which makes batteries and solar energy equipment. But mostly it’s a car company. They believe they are a special car company. A digitally anointed brand that deserves the high valuation for ownership of its stock and ownership of their cars.
Facts
In 2023, the world purchased approximately 93 million passenger vehicles. In that year, Tesla sold about 1.8 million vehicles. That’s about 2% of the world’s purchases. Electric vehicle and plug in electric hybrid sales were about 17 million in 2023. Tesla accounted for a little bit more than 10% of the Worldwide Market. Today its market share internationally is shrinking.
P/E Ratio
Now for some interesting information about the stocks of car companies. There is something called a price to earnings ratio, or P/E. Simply put it’s the ratio of a stock price, to the per share earnings (profits) of the company. The average P/E for all car companies is a little bit less than seven. Tesla’s current P/E is 116 and sinking fast. So, if Tesla is just a car company and not a digitally anointed super brand it’s P/E should be more than 15 times lower than it is currently. I believe that’s where it’s heading.
Now even if you believe Tesla is really a technology company, then you can compare it to the price earnings ratio for Apple, which is 32. And Apple has the highest market capitalization of any company in the world. So that would mean at least a fourfold decrease in the Tesla share price. Tesla has been a darling of the stock market for a few years now. But between Musk’s shenanigans, and increasing worldwide competition, the blush is off the Tesla rose. It is a car company, not a magical technology company. The unbridled sense of its own future profit potential is fading fast.
DJT Also a Company
Similar things have been happening to a stock whose symbol is DJT. We could all guess what that means. It’s Donald J Trump Media. It was almost $80 per share a few months ago. Drum roll please. It’s barely $20 per share now. The market rarely lies and if it does, it does not lie for long. These are real live people and financial institutions. They are voting with their money.
Tesla Brand Value
Another metric which is far harder to monetize is brand value. A brand is the aura of a real or imagined benefit. A brand is the most precious artifact of a consumer facing company. Tesla thanks to the naturalized South African/Canadian citizen can congratulate itself on replacing Bud Light for the most catastrophic loss of brand value in marketing history.
Elections are momentary reflections of citizen sentiment. Markets are ongoing and sustained. The drop in Tesla’s and DJT’s market and brand value reflect the consumer/citizen’s displeasure with their policies. Sooner rather than later it will also impact their political viability. It is just a matter of time.
(Contributed by Steve Miller)