Tesla’s revenues per share have grown very rapidly but have been flat over the past two years as some vehicle prices were reduced and as vehicle deliveries have been relatively flat. Earnings per share have declined in the past three years.
| Tesla Inc. (TSLA, NASDAQ) | |
| RESEARCH SUMMARY | |
| Report Author(s): | InvestorsFriend Inc. Analyst(s) |
| Author(s)’ disclosure of share ownership: | The Author(s) hold no shares |
| Based on financials from: | Dec. 2024 Y.E. + Q3 ’25 |
| Last updated: | November 1, 2025 |
| Share Price At Date of Last Update: | $ 456.00 |
| Currency: | $ Canadian |
| Generic Rating (This rating does not consider the circumstances of any individual investor and is therefore not specific advice for any individual): | Strong Sell at $456 |
| Qualifies as a stock that could be bought with confidence to hold for 20 years? | Not clear |
| Has Wonderful Economics? | Yes |
| Has Excellent and Trustworthy Management? | Yes |
| Likely to grow earnings per share at an attractive rate over the next decade? | Yes |
| Positive near-term earnings outlook? | Unclear |
| Valuation? | Very Expensive |
| SUMMARY AND RATING: The graph of revenues per share (red line) shows very strong increases historically but quite flat in 2024 and 2025. The earnings per share have declined in the past couple of years. The Value ratios, in isolation, would indicate a Strong Sell. Management quality appears strong. The insider trading signal is mostly negative except that Elon Musk recently bough an astounding One billion worth of shares at about $380. Executive compensation is a concern and seems to be reported in an extremely lumpy fashion. The outlook seems muted in the near-term but good longer term. Recent vehicle delivery volumes have declined except for a modest in crease in Q3 as government incentives were about to expire. The economics of the business are good but not great based on the ROE. It has some competitive advantages in terms of its brand name and early-mover in the EV market. Overall we would rate this as a Strong Sell simply based on the very high valuation. It may well continue to be a good long term investment but it should be considered speculative due to the price. There may be a better buying opportunity in 2026. | |
| MACRO ENVIRONMENT: With high inflation and layoffs the macro environment seems weak in the near term. | |
| LONG TERM VALUE CREATION: Tesla is trading at 19 times book value as of October 30, 2025 and has created tremendous value. | |
| DESCRIPTION OF BUSINESS: Tesla’s mission “is to accelerate the world’s transition to sustainable energy”. In 2024 revenue was $98 billion and as of Q3 2025, assets are $134 billion. In 2024 74% of revenues were from automotive sales, 3% from automotive regulatory credits and 2% automotive leasing for a total of 79% from automotive. 10% of revenue was from energy generation and storage and 10% from other services. Vehicles are manufactured in the U.S. (Texas, California, New York and Nevada) China and Germany. | |
| ECONOMICS OF THE BUSINESS: Recently the economics appear to be good but not great. | |
| RISKS: Tesla has many risks – see annual report. Regulations and the liabilities associated with self-driving software are among its risks. | |
| INSIDER TRADING / INSIDER HOLDING: Elon Musk purchased $1 billion dollars worth of Tesla shares in September 2025 at about $380. Most or all other transactions in the public market were sales and therefore the overall insider trading signal is somewhat negative – although it would be positive if we focused on the Elon Musk purchase. | |
| WARREN BUFFETT’s CRITERIA: Buffett indicates that all investments must pass four key tests: the business is simple to understand and predict (pass), has favorable long-term economics due to cost advantages or superior brand power (marginal pass), apparently able and trustworthy management (pass), a sensible price – below its intrinsic value (fail), Other criteria that have been attributed to Buffett include: a low debt ratio (pass), good recent profit history (pass) little chance of permanent loss of the investors capital (marginal pass) a low level of maintenance type capital spending required to maintain existing operations excluding growth (marginal pass) | |
| MOST RECENT EARNINGS AND SALES TREND: Revenues per share were up 11% in Q3 2025 but declined about 11% in each of the two prior quarters. In 2024 revenues per share were up 1%. In Q3 2025 adjusted earnings per share were down 30% | |
| COMPARABLE STORE SALES OR INDUSTRY SPECIFIC STATISTICS: In the past four quarters starting with the most recent vehicle deliveries were up 7%, down 13%, down 13%, up 2%, up 6% and down 9%. | |
| Earnings Growth Scenario and Justifiable P/E | |
| VALUE RATIOS: Analysed at $456. The Price to book value ratio is highly unattractive, in isolation, at 20 but may not be an important indicator in this case. The P/E ratio looks extremely unattractive at 259 based on trailing Adjusted earnings and 172 based on analyst forward earnings. Recent revenue growth has been quite flat. The ROE is unimpressive at 8.2%. In isolation these value ratios would suggest a rating of Strong Sell. | |
| TAXATION FOR SHARE OWNERS: With no dividend. Taxation would be on capital gains | |
| SUPPORTING RESEARCH AND ANALYSIS | |
| Symbol and Exchange: | Tesla |
| Currency: | $ Canadian |
| Contact: | 0 |
| Web-site: | 0 |
| INCOME AND PRICE / EARNINGS RATIO ANALYSIS | |
| Latest four quarters annual sales $ millions: | $95,633.0 |
| Latest four quarters annual earnings $ millions: | $5,046.0 |
| P/E ratio based on latest four quarters earnings: | 318.0 |
| Latest four quarters annual earnings, adjusted, $ millions: | $6,204.0 |
| BASIS OR SOURCE OF ADJUSTED EARNINGS: Non-GAAP as reported by management | |
| Quality of Earnings Measurement and Persistence: | |
| P/E ratio based on latest four quarters earnings, adjusted | 258.6 |
| Latest fiscal year annual earnings: | $7,091.0 |
| P/E ratio based on latest fiscal year earnings: | 226.3 |
| Fiscal earnings adjusted: | $8,419.0 |
| P/E ratio for fiscal earnings adjusted: | 190.6 |
| Latest four quarters profit as percent of sales | 6.5% |
| Dividend Yield: | 0.0% |
| Price / Sales Ratio | 16.78 |
| BALANCE SHEET ITEMS | |
| Price to (diluted) book value ratio: | 20.11 |
| Balance Sheet: (Based on Q3 2025) Tesla’s asset components are: A hefty 31% in cash and short-term investments, 9% in inventory, 4.5% in prepaid expenses, and 3.5% in Accounts receivable for a total of 48% invested in current assets. 29% in property plant and equipment, 4% in a fleet of leased-out vehicle and 3.5% in solar systems, 4% in capitalized leases, 5% in deferred tax assets (which will likely reduce future cash taxes). These are solid assets. These assets are financed 60% by common equity, a modest 6% by debt, 10% by accounts payable (which FAR exceeds accounts receivable), 10% by accrued liabilities, 6% by deferred revenue, and 9% by other accrued liabilities. This is a VERY solid balance sheet. | |
| Quality of Net Assets (Book Equity Value) Measurement: The assets and net book value are solid. But that’s a of very little relevance with the stock trading at 19 times book value as of October 31, 2025. | |
| Number of Diluted common shares in millions: | 3,526.0 |
| Controlling Shareholder: Elon Musk owns 20% of the shares and effectively controls the company. | |
| Market Equity Capitalization (Value) $ millions: | $1,607,856.0 |
| Percentage of assets supported by common equity: (remainder is debt or other liabilities) | 59.8% |
| Interest-bearing debt as a percentage of common equity | 10% |
| Current assets / current liabilities: | 2.1 |
| Liquidity and capital structure: Tesla’s liquidity and capital structure (balance sheet) is very strong. | |
| RETURN ON EQUITY AND ON MARKET VALUE | |
| Latest four quarters adjusted (if applicable) net income return on average equity: | 8.3% |
| Latest fiscal year adjusted (if applicable) net income return on average equity: | 12.4% |
| Adjusted (if applicable) latest four quarters return on market capitalization: | 0.4% |
| GROWTH RATIOS, OUTLOOK and CALCULATED INTRINSIC VALUE PER SHARE | |
| 5 years compounded growth in sales/share | 24.7% |
| Volatility of sales growth per share: | $ – |
| X Years compounded growth in earnings/share | negative past earnings |
| 5 years compounded growth in adjusted earnings per share | 181.7% |
| Volatility of earnings growth: | $ – |
| Projected current year earnings $millions: | not available |
| Management projected price to earnings ratio: | not available |
| Over the last ten years, has this been a truly excellent company exhibiting strong and steady growth in revenues per share and in (adjusted) earnings per share? | 0.0 |
| Expected growth in EPS based on adjusted fiscal Return on equity times percent of earnings retained: | 12.4% |
| More conservative estimate of compounded growth in earnings per share over the forecast period: | 15.0% |
| More optimistic estimate of compounded growth in earnings per share over the forecast period: | 25.0% |
| OUTLOOK AND AMBITIONS FOR BUSINESS: There are near-term head winds for EVs and also Tesla’s solar systems including the removal of subsidies and a lack of federal government support in the U.S. but the long term outlook is good including for full self driving. | |
| LONG TERM PREDICTABILITY: It seems highly likely that Tesla will continue to innovate and grow. The 2024 annual report states that the goal is for Tesla “to become the most valuable company in history”. The “perfection” of full self driving capabilities could be a major boost although it’s not clear if competitors will also offer this feature. | |
| Estimated present value per share: We calculate $76 if adjusted earnings per share grow for 5 years at the more conservative rate of 15% and the shares can then be sold at a far lower P/E of 30 and $153 if adjusted earnings per share grow at the more optimistic rate 25% for 5 years and the shares can then be sold at a far lower but still high P/E of 40. Both estimates use a 7.0% required rate of return. | |
| ADDITIONAL COMMENTS | |
| INDUSTRY ATTRACTIVENESS: (These comments reflect the industry and the company’s particular incumbent position within that industry segment.) Michael Porter of Harvard argues that an attractive industry is one where firms are somewhat protected from competition based on the following four tests. Barriers to entry (marginal pass at best as other auto companies and countries enter the EV industry). No issues with powerful suppliers (pass). No issues with dependence on powerful customers (pass), No potential for substitute products (marginal pass as gasoline vehicles are a substitute) No tendency to compete ruinously on price (marginal pass as auto makers sometimes compete strongly on price). Overall this industry appears to be a good but not necessarily great industry for Tesla as an established incumbent. | |
| COMPETITIVE ADVANTAGE: Tesla has first-mover advantages and a strong brand name. | |
| COMPETITIVE POSITION: Tesla has a strong position in the EV market. | |
| RECENT EVENTS: | |
| ACCOUNTING AND DISCLOSURE ISSUES: Earnings may be under-stated due to the fact that research and development costs are expenses when they are presumably creating long-term value. On the other hand executive compensation appears to have been vastly under-stated in the past few years as Elon Musk’s compensation is accounted for on an extremely “lumpy” basis through share-based awards. | |
| COMMON SHARE STRUCTURE USED: Normal, one vote per share. | |
| MANAGEMENT QUALITY: Well managed. | |
| Capital Allocation Skills: Tesla has had strong capital allocation skills as evidenced by its strong balance sheet and retained earnings. | |
| EXECUTIVE COMPENSATION: Elon Musk will receive truly monstrous compensation if Tesla continues to grow strongly in market value. Elon Musk’s compensation is reported as zero for 2022 through 2024 which probably reflects strange accounting rules. The CFO’s compensation is listed at $139 million in 2024 but close to nothing in the two prior years. Bot the level of and the accounting reporting of compensation are a concern. | |
| BOARD OF DIRECTORS: Warren Buffett has suggested that ideal Board members be owner-oriented, business-savvy, interested and financially independent. Tesla’s Board has nine members including Elon Musk and his brother Kimbal Musk. We have no strong opinion on whether or not this is a good board. | |
| Basis and Limitations of Analysis: The following applies to all the companies rated. Conclusions are based largely on achieved earnings, balance sheet strength, achieved earnings per share growth trend and industry attractiveness. We undertake a relatively detailed analysis of the published financial statements including growth per share trends and our general view of the industry attractiveness and the company’s growth prospects. Despite this diligence our analysis is subject to limitations including the following examples. We have not met with management or discussed the long term earnings growth prospects with management. We have not reviewed all press releases. We typically have no special expertise or knowledge of the industry. | |
| DISCLAIMER: All stock ratings presented are “generic” in nature and do not take into account the unique circumstances and risk tolerance and risk capacity of any individual. The information presented is not a recommendation for any individual to buy or sell any security. The authors are not registered investment advisors and the information presented is not to be considered investment advice to any individual. The reader should consult a registered investment advisor or registered dealer prior to making any investment decision. For ease of writing style the newsletter and articles are often written in the first person. But, legally speaking, all information and opinions are provided by InvestorsFriend Inc. and not by the authors as individuals. The author(s) of this report may have a position, as disclosed in each report. The authors’ positions may subsequently change without notice. | |
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