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> Tesla has a P/E ratio of 50 and annual earnings growth rate of 75%. It's hard to argue that's overvalued. VW Group has had a 5 year maximum P/E ratio of 20.6

by sofixa 4y ago

> Tesla has a P/E ratio of 50 and annual earnings growth rate of 75%. It's hard to argue that's overvalued. VW Group has had a 5 year maximum P/E ratio of 20.69; for Stellantis it's 4.11 (but they're less than 2 years old). True that Tesla is seeing some very good revenue growth, 51% for 2022 compared to 2021. But that revenue is at $86 billion, meanwhile VW Group are at $307 billion. It is flat out ridiculous how overpriced Tesla are, nothing justifies them having a higher market cap than say VW Group.

FredPret 4y ago
From my very quick glance at the numbers, they make roughly the same amount of profit. From that starting point, add in Tesla's much more rapid growth. Then add in another factor for VW having products optimized for a rapidly-disappearing era. TSLA is still overhyped, but I would never invest in VW, unless the stock takes a massive dive, or they spin out Porsche.
bryanlarsen 4y ago
Volkswagen has $185B in debt. When your debt is a lot larger then your market cap the ratios get funny. As an enterprise, VW has a lot of value. But almost all of that goes towards covering the debt rather than providing shareholder value.
- Goz3rr 4y ago
  As a side note for people wondering why they have so much debt, it's mostly from their financing department. The list of most indebted companies is comprised of mostly car makers for that reason: VW, Ford, Toyota and BMW make up half the top 8.
  - ZephyrBlu 4y ago
    So their debt is almost more like bonds (E: maybe bank loan is a better equivalent) than what most people would think of as debt? Like, if they stopped selling cars today they would theoretically recoup all of that debt once all the cars they've sold have been fully paid off via financing.
    - WastingMyTime89 4y ago
      Yes, in a lot of way, modern car companies are actually banks which happen to manufacture cars.
- welterde 4y ago
  They also have quite a lot of assets though. The shareholder equity is around $190B (for Tesla it's around $45B).

by sofixa 4y ago

FredPret 4y ago

From my very quick glance at the numbers, they make roughly the same amount of profit. From that starting point, add in Tesla's much more rapid growth. Then add in another factor for VW having products optimized for a rapidly-disappearing era. TSLA is still overhyped, but I would never invest in VW, unless the stock takes a massive dive, or they spin out Porsche.

bryanlarsen 4y ago

Volkswagen has $185B in debt. When your debt is a lot larger then your market cap the ratios get funny. As an enterprise, VW has a lot of value. But almost all of that goes towards covering the debt rather than providing shareholder value.

Goz3rr 4y ago
As a side note for people wondering why they have so much debt, it's mostly from their financing department. The list of most indebted companies is comprised of mostly car makers for that reason: VW, Ford, Toyota and BMW make up half the top 8.
- ZephyrBlu 4y ago
  So their debt is almost more like bonds (E: maybe bank loan is a better equivalent) than what most people would think of as debt? Like, if they stopped selling cars today they would theoretically recoup all of that debt once all the cars they've sold have been fully paid off via financing.
  - WastingMyTime89 4y ago
    Yes, in a lot of way, modern car companies are actually banks which happen to manufacture cars.
welterde 4y ago
They also have quite a lot of assets though. The shareholder equity is around $190B (for Tesla it's around $45B).