In a recent announcement, Gary Black, Managing Partner of Future Fund, accentuated Tesla, Inc.’s unique position in the electric vehicle (EV) market. As traditional automakers retreat from their EV initiatives, Tesla’s shares surged past the $250 mark, a level not seen in roughly a month. This climb is not only a reflection of the company’s current success but also hints at the sustainable growth trajectory forecasted by industry experts.
Tesla’s spotlight moment comes as Ford Motor Co. reportedly plans to scale down production of its F-150 Lightning pickup truck, reinforcing Black’s view that Tesla is increasingly becoming the primary investable EV player. Black’s analysis is grounded in financial indicators, pointing to the company’s stock trading at 58 times his adjusted earnings per share estimate for 2024. With an expected escalation in volume by 28% and a 32% increase in earnings per share by 2030, Black sees Tesla’s valuation as reasonable.
Black doesn’t stop at mere valuation. He draws comparisons with other tech behemoths, like Apple, using the price-earnings growth ratio (PEG). Tesla’s PEG stands at 1.8, which, when compared to Apple’s three times PEG, signals a favorable investment opportunity, given that a PEG ratio below 1 is seen as particularly promising.
Market watchers are attributing the recent strength in Tesla’s stock to the prospect of falling interest rates. Black suggests that this economic shift could be doubly beneficial for high price-to-earnings (P/E) growth names like Tesla. He posits that as long-term rates decrease, stocks with robust growth potential stand to gain significantly.
Looking ahead, Black identifies multiple levers that could propel Tesla forward. He anticipates global EV adoption to leap from the current 13% to a staggering 60% by 2030, growing at a compounded annual growth rate of 24%. Black predicts Tesla’s slice of the global EV pie will expand from 16% to 20% by the end of the decade, bolstered by the launch of the Cybertruck and an anticipated $25,000 next-generation vehicle.
The numbers reflect an optimistic future. Black forecasts Tesla’s unit sales to surge from 1.8 million in 2023 to 2.4 million in 2024, and eventually hit 10.2 million by 2030. The company’s adjusted EPS is projected to soar from $3.20 in 2023 to $22 in 2030, with a 32% compound annual growth rate. These figures rest on pillars such as auto gross margin expansion, Tesla Energy’s increasing contributions, operating leverage, and strategic cash investments.
Notably, Black’s evaluation does not factor in potential revenues from full-self driving licensing, robotaxi services, or the Tesla Bot, except for a global take rate of 15% for full-self driving. He also anticipates energy revenue to multiply eightfold.
Black challenges investors with a question, highlighting the strength of Tesla’s growth relative to its valuation. He asserts the rarity of finding another large-cap company exhibiting similar vigor in growth and market valuation. Tesla’s thriving performance and Black’s bullish stance underscore the company’s solid standing in the electric vehicle race, even as it wrapped up the trading session on Thursday with a 4.91% climb to $251.05.
As the EV landscape continues to evolve, Tesla’s strategic moves and growth metrics will be pivotal points of analysis for investors and market spectators alike. We invite our readers to delve deeper into the implications of Tesla’s market position and to follow future mobility discussions and updates, ensuring they remain at the forefront of this transformative industry.
Let’s know about your thoughts in the comments below!
