The hard facts
Dec 22, 2022
Tesla’s market cap has fallen below the market cap of Exxon for the first time since 2020. Investors are worried by the Musk/Twitter saga, slower deliveries and most importantly by the valuation of the growth company Tesla in a higher interest rate environment. The hard numbers: Exxon generated 387 billion USD in revenues and 54 billion USD in net profit over the last 12 months, dwarfing Tesla’s 75 billion in sales and 11 billion net income over the same period. After a 61% drop in its share price y-t-d, Tesla still trades at 42 times past earnings and pays no dividends. After a 77% increase in its share price y-t-d, Exxon trades at 8.5 trailing earnings and has a dividend yield of 3.3%. This comparison may be unfair but shows to what extend investors (re)appreciate fundamentals and valuations in today’s environment. This is exactly what we do at ECP when we pick stocks.