Tesla shares have polarized since the automaker first went public, but after hitting a trillion-dollar market capitalization last December, the company has captured the attention of most investors. As the electric vehicle industry continues to emerge, Tesla is expected to continue growing, and some even believe the automaker could double its previous highs.
Some analysts suggest Tesla could reach a market value of $2 trillion by 2025, as reported The Motley Fool. Although the electric vehicle maker is down 12.38% on the year at the time of writing (after still falling for much of the year), long-term bulls still look to the future to find answers.
The Motley Fool attributes the fall in Tesla shares to a broader stock sell-off affecting the broader stock market, as well as factory closures and supply chain constraints. Despite these factors, Tesla’s second-quarter earnings per share still jumped 56.6% year-over-year to $2.27, beating average Wall Street expectations by about 27%. Additionally, Tesla reported an increase in revenue of $16.9 billion, up 41.6% year-over-year.
Admittedly, Tesla had its best production month yet in June, although it had to deal with a major production drop at its Gigafactory Shanghai. While the crisis contributed to declines in production and delivery of 15.3% and 17.9% compared to the previous quarter, respectively, these figures were up 25.3% and 26.5% year on year. on the other.
Tesla’s earnings report came as the United States reached a tipping point for mass adoption of electric vehicles. Allied Market Research expects the global electric vehicle market to grow at a compound annual growth rate (CAGR) of 18.2% through 2030. This could put Tesla in a good position going forward, even if competition intensifies.
Data from S&P Market Intelligence Index analysts predicts that Tesla will generate approximately $164 billion in total sales by 2025. This figure would represent a five-year CAGR of 25.4% over last year’s revenue. .
Currently, Tesla is trading at an enterprise value to EBITDA multiple of 55.6. Assuming that figure remains and Tesla holds a 25% EBITDA margin, the automaker’s annual EBITDA would reach $41 billion by 2025, bringing the company’s enterprise value to $2.3 trillion.
Tesla’s moves at annual shareholder meetings. Video: YouTube/Bloomberg
It is a bit ambitious to say that these conditions are likely, but they are certainly not beyond the realm of possibility. Some bullish analysts are confident the automaker will eventually top the $2 trillion mark in market value. Others are more bearish, suggesting that competition may prevent this from happening.
As to whether Tesla will reach a market value of $2 trillion by 2025, no one can be sure. But with new projects on the horizon like the Optimus robot, Cybertruck and self-driving robotaxis, Tesla could be well positioned to maintain its positioning in the years to come.
Originally published by EVANNEX. By Peter McGuthrie
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