Here's where Apple, Tesla and Amazon stood when they hit a $600B market cap
Automaker Tesla has managed to hit a $600 billion market capitalization with a much smaller business than Apple and Amazon when they crossed the same threshold, Morgan Stanley says.
Credit: Tesla
In a note to investors seen by AppleInsider, a group of Morgan Stanley analysts contextualized Tesla's new market valuation by taking a look back at the business size, valuations, and market conditions surrounding Apple and Amazon when they both hit the $600 billion mark.
Apple, for example, crossed the $600 billion market valuation threshold in August 2012. Compared to the Cupertino tech giant, Tesla is one-fourth the size of Apple in forward year revenue and one-seventh the earnings before interest, taxes, depreciation, and amortization (EBITDA).
"While it took Apple nearly 30 years to reach a $300B market cap, it took just 18 months to grow from $300B to $600B in market cap in August of 2012," said Morgan Stanley Apple analyst Katy Huberty.
At the time, Huberty said, Apple was transitioning from a hyper-growth phase to a more sustainable one. It had just posted five consecutive years of more than 70% iPhone shipment growth and 63% annual earnings-per-share growth.
"In the following two years, new CEO Tim Cook managed through a slower growth period while continuing to invest in innovation and initiate the first capital return plan," the analyst added.
During that slower growth period under the helm of Tim Cook, Services still only represented about 10% of revenue. At the time, investors viewed Apple as a "cyclical, product cycle driven hardware company." They don't anymore.
When online retail giant Amazon hit a $600 billion market capitalization in 2018, it was also much larger than Tesla. Morgan Stanley says Tesla was one-fifth the size of Amazon in forward year revenue and one-third the size in terms of forward year EBITDA.
According to internet analyst Brian Nowak, Amazon was building out a significant fulfillment network build and managed to scale its high margin revenue streams.
"Over the course of 2018, sustainable growth in core retail, revenue and record margins justified this elevated investment in fulfillment capacity and allowed the market to appreciate AMZN's long-term addressable market and earnings power," Nowak said.
Currently, Tesla trades at about 80x the Morgan Stanley EBITDA estimate. When it hit $600 billion, Apple was at about 8x the forward year EV/EBITDA, and Amazon was at 22 EV/EBITDA. That means Tesla's multiple is 10-fold that of Apple at the time and 3.5-fold that of Amazon.
The S&P 500 price-to-earnings multiple is also about 75% higher than when Apple hit its $600 billion milestone, and about 21% higher than when Amazon hit that treshold.
"While harder to quantify, we also believe Tesla is garnering greater levels of enthusiasm from investors give nits technological dominance (both demonstrated and perceived) vs. the established competition in the vast global transportation market," the analysts wrote.
Credit: Tesla
In a note to investors seen by AppleInsider, a group of Morgan Stanley analysts contextualized Tesla's new market valuation by taking a look back at the business size, valuations, and market conditions surrounding Apple and Amazon when they both hit the $600 billion mark.
Apple, for example, crossed the $600 billion market valuation threshold in August 2012. Compared to the Cupertino tech giant, Tesla is one-fourth the size of Apple in forward year revenue and one-seventh the earnings before interest, taxes, depreciation, and amortization (EBITDA).
"While it took Apple nearly 30 years to reach a $300B market cap, it took just 18 months to grow from $300B to $600B in market cap in August of 2012," said Morgan Stanley Apple analyst Katy Huberty.
At the time, Huberty said, Apple was transitioning from a hyper-growth phase to a more sustainable one. It had just posted five consecutive years of more than 70% iPhone shipment growth and 63% annual earnings-per-share growth.
"In the following two years, new CEO Tim Cook managed through a slower growth period while continuing to invest in innovation and initiate the first capital return plan," the analyst added.
During that slower growth period under the helm of Tim Cook, Services still only represented about 10% of revenue. At the time, investors viewed Apple as a "cyclical, product cycle driven hardware company." They don't anymore.
When online retail giant Amazon hit a $600 billion market capitalization in 2018, it was also much larger than Tesla. Morgan Stanley says Tesla was one-fifth the size of Amazon in forward year revenue and one-third the size in terms of forward year EBITDA.
According to internet analyst Brian Nowak, Amazon was building out a significant fulfillment network build and managed to scale its high margin revenue streams.
"Over the course of 2018, sustainable growth in core retail, revenue and record margins justified this elevated investment in fulfillment capacity and allowed the market to appreciate AMZN's long-term addressable market and earnings power," Nowak said.
Currently, Tesla trades at about 80x the Morgan Stanley EBITDA estimate. When it hit $600 billion, Apple was at about 8x the forward year EV/EBITDA, and Amazon was at 22 EV/EBITDA. That means Tesla's multiple is 10-fold that of Apple at the time and 3.5-fold that of Amazon.
The S&P 500 price-to-earnings multiple is also about 75% higher than when Apple hit its $600 billion milestone, and about 21% higher than when Amazon hit that treshold.
"While harder to quantify, we also believe Tesla is garnering greater levels of enthusiasm from investors give nits technological dominance (both demonstrated and perceived) vs. the established competition in the vast global transportation market," the analysts wrote.
Comments
Methinks if Apple offers their own car, one will be able to buy Tesla is a dime for a dollar.
I'm not saying Tesla will die, I'm saying the stock price is insane unless you think Tesla will be able to seize half the automobile market.
To put a valuation on Tesla as just car company is short sighted and ignores the other advantages they have. What investors are paying for are the potential of all their capabilities and what they will be able to produce. How much battery do you think is available for all other BEV makers when nickel is already scarce just based on Tesla’s need. Not enough mining operations right now and Tesla already secured the rights to mine nickel in some countries.
Stock market value is over $500k per car sold: this makes absolutely no sense at all.
They will be ok next 2 years and then it goes downhill fast.
I have to agree.You'd have to normalize all of the differences between the past and present economic, societal, investor risk tolerance, monetary policy, size of market, and a plethora of other changing market conditions to do a more accurate and fair comparison. That's probably not even possible, and still may not be meaningful in any way. These kind of stats are interesting tidbits of trivia to fill in a little void in the boredom of everyday life, but do they mean anything? Probably not.
https://www.cnet.com/roadshow/news/tesla-ev-sales-western-europe-falling/
"In case the last few quarters of profitability haven't hipped you to this, Tesla sells a lot of electric cars. This is true pretty much everywhere that it operates. However, according to a report published Wednesday by InsideEVs, Tesla is no longer the biggest fish in Western Europe.
While other electric vehicle makers have had a relatively slow increase in sales compared to Tesla's big spike and subsequent plateau starting in January of 2019, the slow and steady route seems to be paying off for the Renault Nissan MitsubishiAlliance and the Volkswagen Group, both of which eclipsed Tesla's sales as of August of 2019."
The Model Y isn't going to change that, albeit that Elon is already talking about a redesign as relatively few buyers are interested in the Model Y.
More to the point, Tesla has no battery advantages over any other manufacturer.
Did I mention that Tesla's notably shitty service and quality is one of the reasons that buyers are losing interest in Tesla?
Simply law of supply and demand. 40,000,000 people on bread lines, and stocks going through the roof.
It ain't rocket science.