By Noël Randewich
(Reuters) – Tesla (NASDAQ:) shareholders approved CEO Elon Musk’s $56 billion pay package in what was seen as an affirmation of his leadership, but the electric car maker’s shares remain richly valued, even after several years of weak stocks.
Shareholders at Tesla’s annual general meeting on Thursday reapproved Musk’s record-breaking compensation for 2018, which advocates say is necessary to keep the billionaire focused on the car company.
While Musk still faces a long legal battle to convince a Delaware judge who invalidated the January pay package, Tesla shares rose nearly 3% on Thursday, ahead of the meeting, after Musk took to his social media platform X had posted that he had received shareholder approval.
Even after Thursday’s gain, Tesla shares are down 27% this year, with its market value more than halved to $582 billion from its November 2021 high, as Tesla faces stiff competition in China from BYD (SZ:) and other EV manufacturers selling less. -expensive cars.
Tesla shares got a much-needed boost after Musk said on April 23 that Tesla would release cheaper new models in 2025. Quarterly sales fell for the first time since 2020, when the COVID-19 pandemic hampered production and deliveries.
Meanwhile, Wall Street’s other tech heavyweights have soared. Amazon (NASDAQ:) and Alphabet (NASDAQ:) are each up more than 20% through 2024, Meta Platforms (NASDAQ:) are up more than 40%, and Nvidia (NASDAQ:) has nearly tripled. Tesla’s stock market value has also been overtaken by Eli Lilly (NYSE:) and Broadcom (NASDAQ:).
Analysts’ optimism about Tesla has cooled dramatically. The average analyst price target for Tesla is now $181, down from $226 at the start of 2024, and just a shade below Thursday’s closing price of $182.47, according to LSEG.
Musk has told investors to think of Tesla as an “AI robotics company” rather than an automaker, and its shares have long traded at earnings multiples higher than many tech companies.
Tesla stock is worth almost 61 times forward earnings, up from about 22 times in January, but that’s well below the price-to-earnings ratio of 150 reached in November 2021.
By comparison, General Motors (NYSE:) and Ford Motor (NYSE:) trade at price-to-earnings ratios of 5 and 6, respectively, while Toyota (NYSE:) trades at nine times forward earnings, according to LSEG.
In another reflection of Tesla’s high valuation relative to its business, Tesla’s stock market value is equal to almost $6 million per employee, slightly less than two years ago, but still almost twenty times higher than that of GM and Ford, each of which has about $300,000 on the market. value per employee.
Unlike GM and Ford, part of Tesla’s employee base works at service centers around the world, similar to GM and Ford’s independent dealer networks.
Even after its decline, Tesla remains the world’s most valuable automaker, far ahead of Toyota, the world’s largest automaker by volume.
Toyota has a stock market value of approximately $270 billion. In 2020, Tesla’s rising stock made the company more valuable than the combined value of Toyota, Volkswagen (ETR:), Hyundai (OTC:), GM, Ford and BMW (ETR:).
In January, Tesla’s declining share price caused its value to fall slightly below the combined value of the other major automakers.
