Show Me the Money! 27 July, 2020, by Vladimir Rojankovski, Senior Analyst, Grand Capital
On Wednesday previous week, Tesla reported blockbuster second-quarter earnings that exceeded Wall Street's expectations. Electric car manufacturer also showed its fourth consecutive quarterly profit, despite grim predictions about heavy impact of COVID-19 on company’s sales. It was the last milestone required to meet to be considered for inclusion in the S&P 500 index.
Now that Tesla has met the S&P 500's eligibility requirements, it will be added to a pool of other eligible candidates and considered for inclusion when an opportunity presents itself. So, we can’t say it’s a 100% done deal.
From fundamental perspective, Tesla’s valuation is outrageous: P/E of 715, price-to-book of 30, Debt-to-EBITDA of over 4 and net margin of under just 1.5% (one and a half percent) make it a prohibitive buy from any perspective. However, despite all common sense, Tesla is in a very good position of short-term growth on expectation of inclusion to the S&P 500 index. The target price is also quite obvious – somewhere under $1800 dollars, the mark the stock once visited.
On Wednesday previous week, Tesla reported blockbuster second-quarter earnings that exceeded Wall Street's expectations. Electric car manufacturer also showed its fourth consecutive quarterly profit, despite grim predictions about heavy impact of COVID-19 on company’s sales. It was the last milestone required to meet to be considered for inclusion in the S&P 500 index.
Now that Tesla has met the S&P 500's eligibility requirements, it will be added to a pool of other eligible candidates and considered for inclusion when an opportunity presents itself. So, we can’t say it’s a 100% done deal.
From fundamental perspective, Tesla’s valuation is outrageous: P/E of 715, price-to-book of 30, Debt-to-EBITDA of over 4 and net margin of under just 1.5% (one and a half percent) make it a prohibitive buy from any perspective. However, despite all common sense, Tesla is in a very good position of short-term growth on expectation of inclusion to the S&P 500 index. The target price is also quite obvious – somewhere under $1800 dollars, the mark the stock once visited.