Part 6/10:
In a downturn, Tesla's earnings might temporarily decline, especially if auto demand collapses due to higher interest rates or broader recessionary pressures. However, these are expected to be short-lived, with Wall Street analysts like Gary Black projecting Tesla's earnings could multiply seven-and-a-half times over the next decade, even with conservative delivery estimates.
If Tesla's stock were to drop sufficiently, its P/E ratio would plummet well below the average for the S&P 500, which hovers around 16. Given Tesla's rapid growth prospects, a P/E below 10 or even 5 would represent an enormous bargain. For instance:
- At Tesla's current peak valuation (~$407), a 95% correction would bring the stock down to about $20, with a correspondingly minuscule P/E ratio.