TSLA is now overvalued and could go down -42%

Based on our analysis, Tesla has been rated as overvalued with a score of 1 out of 5 stars by Cashu. This rating stems from several key financial ratios that indicate potential concerns when compared to its sector. The Price-to-Earnings (PE) Ratio for Tesla stands at an exceptionally high 160.45, while the sector average is only 15.61. A high PE ratio suggests that investors are paying significantly more for each dollar of earnings compared to the industry norm, which can indicate overvaluation. Moreover, Tesla's Price-to-Book (PB) Ratio is 17.78, compared to the sector average of 1.97. The PB ratio measures a company's market value relative to its book value, and such a high ratio may signify that investors are expecting extraordinary future growth that may not materialize. While Tesla has a solid Net Profit Margin of 7.30, which is significantly better than the sector average of 0.09, this alone does not justify its high valuation in light of the other ratios. Furthermore, the Return on Equity (ROE) Ratio is 9.78 compared to the sector's 1.09, indicating that Tesla is effectively generating profits from its shareholders' equity. However, the exceptionally high valuations in the PE and PB ratios raise concerns about sustainability. In summary, despite strong profitability metrics, Tesla’s valuation appears disconnected from industry standards, leading to its overvalued rating. This is not a comprehensive overview of our valuation, and should not be viewed as financial advice. Always do your own research before considering an investment.