Tesla (TSLA) has experienced a significant decline this month, driven by third-quarter delivery results and the October 10 robotaxi event. While Tesla’s stock has seen a downturn, it has become considerably more expensive based on key financial metrics.
The stock is down 11.8% year-to-date, with a nearly 17% drop in October alone. However, earnings projections for the company have dropped even more sharply. Analysts now expect Tesla’s earnings per share (EPS) for 2024 to be around $2.24, which remains stable compared to recent months but is a decline from $2.39 in June, $3.81 at the end of 2023, and a significant drop from $7.07 at the end of 2022.
As a result, Tesla’s price-earnings (P-E) ratio for 2024 is now at 97.8, down from 116.8 at the end of September but still much higher than 65.3 at the close of 2023 and 17.4 at the end of 2022.
The same trend applies to 2025. Analysts have lowered Tesla’s EPS estimate for 2025 to $3.14, compared to $5.29 at the end of 2023 and $7.79 at the end of 2022. The P-E ratio for Tesla stock in 2025 is now 69.8, which is a reduction from 81.9 in late September but still significantly higher than 47 at the end of 2023 and 15.5 in late 2022.
Tesla’s valuation remains far above other established automakers. Toyota’s P-E ratio for fiscal 2025 is 8, while General Motors (GM) has a ratio of 5. In the electric vehicle (EV) space, Li Auto (LI) has a 2025 P-E ratio of 16, and BYD (BYDDF) sits at 16.5.
Nvidia (NVDA), another high-growth stock, has nearly tripled in value this year. Its P-E ratio is currently 61, with a January 2025 ratio of 49, as Nvidia continues to show strong growth and earnings estimates. Looking ahead to January 2026, Nvidia’s P-E ratio is expected to drop to 34.
Although high price-earnings ratios are often associated with growth stocks, Tesla is currently not viewed as a growth company. In the past, Tesla’s high valuations were driven by expectations of rapid expansion, but that narrative has shifted.
Tesla’s Bullish Outlook
The bull case for Tesla lies in looking beyond 2025. Many analysts attribute their stock price targets to areas outside of electric vehicles (EVs), such as autonomous driving, robotics, and artificial intelligence. Tesla’s current market valuation reflects a significant bet that these high-tech ventures could deliver substantial profits in the future.
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