Insights

• Tesla's revenue growth is impressive, but its profitability is declining, indicating that the company is facing challenges in managing its costs and maintaining its margins.
• The company's heavy investments in research and development and its aggressive growth strategy are putting pressure on profitability.
• Tesla's ability to control its costs and improve its efficiency will be crucial to its future profitability.
• Tesla's strong cash position and increasing working capital indicate a healthy short-term liquidity position.
• However, the company's high debt levels and increasing leverage raise concerns about its long-term solvency, particularly if interest rates rise or economic conditions deteriorate.
• Tesla's future prospects are highly dependent on its ability to successfully execute on its ambitious growth plans, manage its costs, and improve its efficiency.
• The company's ability to generate positive free cash flow will be crucial to its debt repayment capacity, dividend growth potential, and investment in future growth opportunities.
• Tesla's future success will also depend on its ability to navigate a complex regulatory environment and manage a wide range of operational and financial risks.

Analysis

• Revenue - Tesla's revenue growth has been consistently strong, driven by strong demand for its electric vehicles and energy storage products. - The company's expansion into new markets and its aggressive growth strategy have contributed to its revenue growth. - However, Tesla is facing challenges in maintaining its average selling prices, which is putting pressure on its profitability.
  • Profitability
    • Tesla's profitability has been declining, as its margins have been shrinking.
    • The company's heavy investments in research and development and its aggressive growth strategy are putting pressure on profitability.
    • Tesla's ability to control its costs and improve its efficiency will be crucial to its future profitability.
  • Liquidity
    • Tesla's strong cash position and increasing working capital indicate a healthy short-term liquidity position.
    • However, the company's reliance on short-term financing to fund its operations could increase its short-term liquidity risk in the future.
  • Solvency
    • Tesla's high debt levels and increasing leverage raise concerns about its long-term solvency, particularly if interest rates rise or economic conditions deteriorate.
    • The company's ability to manage its debt obligations and maintain its profitability will be crucial to its financial flexibility and strategic options in the future.
  • Operational Efficiency
    • Tesla's operational efficiency has been improving, as evidenced by its declining inventory levels and its ability to control its operating expenses.
    • However, the company's high capital expenditures and research and development costs are putting pressure on its profitability.
  • Cash Flow Analysis
    • Tesla's operating cash flow has been consistently increasing, driven by strong revenue growth and improvements in working capital management.
    • However, the company's high capital expenditures and its reliance on debt financing have contributed to its volatile cash flow patterns.
    • Tesla's ability to generate positive free cash flow will be crucial to its debt repayment capacity, dividend growth potential, and investment in future growth opportunities.
  • Risk Factors
    • Tesla's aggressive growth strategy and its reliance on debt financing could lead to higher interest expenses and potential financial distress if its profitability does not keep pace with its debt obligations.
    • The company's heavy investments in research and development and its expansion into new markets carry significant execution risks.
    • Tesla's reliance on suppliers and potential supply chain disruptions could impact its production and profitability.
    • The evolving regulatory landscape around autonomous driving and data privacy could pose challenges to Tesla's growth plans.
  • Future Outlook
    • Tesla's future prospects are highly dependent on its ability to successfully execute on its ambitious growth plans, manage its costs, and improve its efficiency.
    • The company's ability to generate positive free cash flow will be crucial to its debt repayment capacity, dividend growth potential, and investment in future growth opportunities.
    • Tesla's future success will also depend on its ability to navigate a complex regulatory environment and manage a wide range of operational and financial risks.

Benchmarks (as of 2025-03-04)

• Performance Comparison:

  • Tesla, Inc. (TSLA) has shown mixed performance compared to the Consumer Discretionary Select Sector SPDR Fund (XLY). Over the past year, TSLA has significantly outperformed XLY, with returns of 50.51% versus 16.49%. However, over longer periods such as 2 and 3 years, TSLA has underperformed, with returns of 40.36% and 1.43% respectively, compared to XLY's 45.82% and 30.91%. More recently, TSLA has underperformed, with YTD, 1-week, 1-month, and 3-month returns all lower than XLY.

• Risk and Return Analysis:

  • The annualized returns show that TSLA has a higher return over the past year (50.51%) compared to XLY (16.49%). However, over 2 and 3 years, TSLA's annualized returns (18.48% and 0.48%) are lower than XLY's (20.76% and 9.39%).
  • TSLA's annualized volatility is consistently higher than XLY's, indicating that TSLA's price fluctuations are more pronounced. For example, in Q1 2025, TSLA's volatility ranged from 49.45% to 68.87%, while XLY's ranged from 15.92% to 23.35%.
  • TSLA's maximum drawdown was -73.63% on 01/03/2023, significantly larger than XLY's maximum drawdown of -39.67% on 12/28/2022. This indicates a higher risk profile for TSLA.

• Risk-Adjusted Performance:

  • The Sharpe ratios for TSLA and XLY vary. XLY generally exhibits more consistently positive Sharpe ratios compared to TSLA, suggesting better risk-adjusted returns. In Q1 2025, TSLA's Sharpe ratio ranged from 0.83 to 1.58, while XLY's ranged from 0.84 to 1.81, indicating that XLY has recently provided better risk-adjusted returns.
  • TSLA's beta is consistently higher than XLY's, indicating that TSLA is more sensitive to market movements. In Q1 2025, TSLA's beta ranged from 2.38 to 2.63, while XLY's beta ranged from 1.21 to 1.25.

• Overall Assessment:

  • TSLA demonstrates higher growth potential and volatility compared to the Consumer Discretionary Select Sector SPDR Fund (XLY). While TSLA has shown periods of significant outperformance, it also carries a higher risk profile due to its greater volatility and larger drawdowns. XLY, on the other hand, offers more stable and consistent risk-adjusted returns. Investors should consider their risk tolerance and investment horizon when choosing between these two options. TSLA may be suitable for investors seeking high growth and willing to accept higher risk, while XLY may be more appropriate for those prioritizing stability and lower risk.

Peers Price History(as of 2025-03-04)

• Performance Comparison:

  • Tesla (TSLA) has shown mixed performance compared to General Motors (GM) and Uber (UBER). Over the past year, TSLA has outperformed both GM and UBER with a return of 50.51% compared to GM's 12.07% and UBER's -4.84%. However, year-to-date, TSLA has significantly underperformed, with a return of -28.27% compared to GM's -11.97% and UBER's 19.14%. Over a 3-year period, TSLA has underperformed both GM and UBER, with a return of 1.43% compared to GM's 16.46% and UBER's 163.42%. This indicates that while TSLA has had periods of strong performance, it has also experienced significant volatility and underperformance in certain periods.

• Risk and Return Analysis:

  • Tesla (TSLA) has shown higher annualized returns over the past year (50.51%) compared to General Motors (GM) (12.07%) and Uber (UBER) (-4.84%). However, over longer periods (2 and 3 years), TSLA's annualized returns are lower than UBER's.
  • Tesla (TSLA) has exhibited higher annualized volatility compared to General Motors (GM) and Uber (UBER) for much of the analyzed period. This higher volatility suggests that TSLA's stock price is subject to more significant fluctuations.
  • Tesla (TSLA) experienced a maximum drawdown of -73.63% on 01/03/2023, which is larger than the maximum drawdowns for General Motors (GM) (-58.96%) and Uber (UBER) (-66.32%). This indicates that TSLA carries a higher risk of substantial declines from peak values.

• Risk-Adjusted Performance:

  • Tesla (TSLA) has generally lower Sharpe Ratios compared to General Motors (GM) and Uber (UBER), indicating less favorable risk-adjusted returns. In early 2025, Tesla's Sharpe Ratio has decreased, while General Motors' and Uber's Sharpe Ratios have remained relatively stable, suggesting that Tesla's recent risk-adjusted performance has declined compared to its peers.
  • Tesla (TSLA) consistently exhibits a beta greater than 1, indicating that it is more volatile than the market. General Motors (GM) generally has a beta around or slightly greater than 1 until Q2 2024, after which it is generally less than 1, suggesting it is about as or less volatile than the market. Uber (UBER) also has a beta greater than 1, indicating higher volatility than the market.

• Overall Assessment:

  • Tesla (TSLA) presents a higher-risk, higher-reward profile compared to General Motors (GM) and Uber (UBER). While TSLA has demonstrated periods of strong performance, it is also subject to significant volatility and drawdowns. General Motors (GM) offers a more conservative investment profile with lower volatility and drawdowns, but also lower returns. Uber (UBER) has shown strong performance over the past three years, with high annualized returns and Sharpe Ratios, indicating better risk-adjusted returns.
  • A significant trend is the recent underperformance of TSLA compared to GM and UBER, as indicated by the year-to-date returns. This suggests that recent market conditions or company-specific factors may be negatively impacting TSLA's stock price.

Peers Fundamentals(as of 2024-12-31)

1. Market Position and Size:

   • TSLA is a dominant player in the electric vehicle market with a market capitalization significantly larger than its peers, General Motors (GM) and Uber Technologies (UBER).
   • TSLA's market cap is significantly larger than its revenue, EBITDA, and net income, suggesting investors are placing a high premium on its future growth potential.
   • This large market cap reflects investor confidence in TSLA's ability to capitalize on the growing electric vehicle market.

2. Profitability and Efficiency:

   • TSLA exhibits relatively strong profitability compared to its peers, with higher Gross Profit Margin, EBITDA Margin, and Net Profit Margin than GM, but lower than UBER.
   • All three companies have significantly higher profitability metrics than the industry average.
   • TSLA's profitability is strong considering its size and revenue, indicating its ability to generate profits despite its large market cap.
   • TSLA's efficiency in generating returns from its assets, equity, total capital, and invested capital is relatively strong compared to its peers, but not as high as UBER's.

3. Financial Health and Stability:

   • TSLA demonstrates strong liquidity and a low level of debt compared to its peers, as evidenced by its higher Current Ratio, Quick Ratio, and lower Total Debt to Total Equity Ratio and Debt / EBITDA.
   • This suggests a strong financial position with a low risk of financial distress.

4. Valuation and Market Perception:

   • TSLA trades at a premium valuation compared to its peers and industry standards, reflecting investor optimism about its future growth potential and its position as a leader in the electric vehicle market.
   • This premium valuation is reflected in its high Enterprise Value To Sales, Enterprise Value To EBITDA, Price To Earnings, Price to Book Ratio, and Price To Sales Ratio.

5. Cash Flow and Capital Management:

   • TSLA's cash flow generation is relatively strong compared to its peers, with higher Net Operating Cash Flow and Free Cash Flow than UBER, but lower than GM.
   • TSLA's capital expenditure is relatively high compared to its peers, indicating its focus on investing in future growth.
   • Despite its large market cap, TSLA is able to generate a relatively high level of free cash flow.

6. Growth and Future Prospects:

   • TSLA exhibits consistently higher growth in sales/revenue, EBITDA, and free cash flow compared to the peer group average, suggesting it is outpacing its peers in terms of overall business growth.
   • TSLA's 5-year CAGR figures are significantly higher than its 3-year CAGR figures for sales/revenue, EBITDA, and free cash flow, indicating accelerating growth over the past five years.
   • This strong growth suggests that TSLA is gaining market share and expanding its operations, indicating a positive outlook for its future prospects.

7. Potential for Investment:

   • TSLA is an attractive investment for investors who are bullish on the future of the electric vehicle market.
   • Its strong growth, high valuation, and low debt suggest it is well-positioned to capitalize on the growing demand for electric vehicles.
   • However, investors should consider TSLA's lower profitability and earnings per share compared to its peers, and its lower cash flow generation compared to UBER.

8. Key Risks and Considerations:

   • TSLA's high valuation is a significant risk, as it is possible that the market is overestimating its future growth potential.
   • TSLA's lower profitability and earnings per share compared to its peers suggest that it may need to improve its efficiency and cost management to further enhance its financial performance.
   • TSLA's dependence on government subsidies and incentives for its electric vehicle sales could be a risk if these policies change.

9. Overall Assessment:

   • TSLA is a financially strong company with a dominant market position in the electric vehicle market.
   • Its strong growth, high valuation, and low debt suggest a positive outlook for its future prospects.
   • However, investors should be aware of the risks associated with its high valuation, lower profitability compared to peers, and dependence on government subsidies.