As traders continue to bid up Tesla, is the EV sector approaching a bubble?
As Tesla has become the world’s largest motor manufacturer in terms of market capitalisation, IGTV's Jeremy Naylor speaks to John Meyer from SP Angel to discuss the electric vehicle sector and whether there’s a bubble forming.
The two discuss Tesla Inc, which market capitalisation has now eclipsed all of the other major manufacturers. As Jeremy points out, the company barely turns a profit, with a P/E ratio of 1287, which means it would take 1287 years for investors to earn back their investment at current prices. In comparison, the sector average is a P/E ratio of 14.6. According to Jeremy, the share price would have to fall substantially, or the company would have to increase earnings by an unrealistic sum to return the P/E ratio to the sector average.
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