Hindsight is a wonderful thing and if we’d have known the juggernaut that Tesla would become back at its 2010 initial public offering (IPO), we would be rolling in cash, new research reveals.
The electric automaker led by Elon Musk IPO’d on June 29, 2010, pricing some 13.3 million shares at $17 each. Tesla’s stock price has soared over the past 12 years and currently sits at a touch over $303, although that comes after a 5-for-1 split on August 31, 2020 and a 3-for-1 split on August 25, 2022.
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Accounting for this split, Tesla’s IPO price was roughly $1.13 per share. So, if you had invested $10,000 at this price, you would have acquired 588 shares. This would now be 8,820 shares after the split had you not sold a single one and the investment would have skyrocketed from $10,000 all the way to $2,643,178. That is a 26,332 per cent increase in value in just over 12 years.
The Motley Fool rightly notes that Tesla has disrupted the car industry more than any other automaker over the past decade and remains on the forefront of the electrification of the wider industry. While many still expect legacy automakers to eventually catch up with Tesla, many Wall Street analysts state that the car manufacturer will not concede its first-mover advantages.
However, not everything is rosy with Tesla and its $939 billion market valuation. For starters, it shares are trading at 56 times its forecasted earnings per share whereas most automaker trade in single-digit forward price-to-earnings ratios. Like some companies, most of Tesla’s revenue comes from its car business. In addition, almost $2 billion worth of its profits come from the sale of renewable energy credits, inflating how profitable the company is. The Motley Fool adds that Elon Musk’s tendency to miss promised deadlines is also “a big problem.”
