The Future Fund LLC Managing Partner and Tesla bull, Gary Black, has expressed concerns that the company’s earnings per share (EPS) revisions have not kept pace with the stock price surge since the recent Presidential elections.
The Stock Price Surge
Tesla’s stock price has increased by 51% year-to-date, with a 50% surge since the election. However, Black notes that the company’s FY2025 adjusted EPS estimates have only increased by 1.6% during the same period.
P/E Expansion
Black explains that the entire 50% price appreciation since the election reflects P/E expansion, with FY’25 EPS estimates increasing from 77x before the election to 114x today, a 48% increase.
A Word of Caution
Despite being very bullish on the stock, Black is cautious, as he believes multiple expansions should reflect an acceleration in earnings growth. The expansion could come next year if Tesla gets robotaxi deployment permits from Texas and California or if other automakers attempt to license the company’s full self-driving driver assistance software.
Analyst Ratings
Overall, analysts have a consensus rating of “Buy” on the Tesla stock, with the highest price target being $411. Recent analyst ratings by Guggenheim, BofA Securities, and Roth MKM have an average price target of $318.33, implying an 18% downside.
Stock Performance
Tesla shares closed up 5.3% at $389.22 on Friday, with the stock up by nearly 57% year-to-date, taking its market capitalization over $1 trillion.
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