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This report focuses on the analysis of Tesla’s financial performance. In particular, the report aims at analyzing Tesla’s performance in terms of DuPont analysis and shareholder return in 2021 against GM’s performance and Tesla’s performance in 2020. Both value-based and traditional measures were used to for an opinion regarding the overall performance of Tesla in 2021.
Tesla’s share price grew from $235.22 per share at year end of 2020 to $352.26 at year end of 2021. This implies that the annual return on investment in 2021 of 49.76%. Such a performance is almost twice as high as S&P500 index in 2021 (26.89%), and a little less than 900 percentage points higher than that of GM’s returns. While Tesla’s return in 2021 were lower by 693.62% in comparison with 2020, the company’s returns were 743.38% in 2021, which is a performance one cannot expect to be sustained. Thus, it may be stated that Tesla’s performance in terms of total shareholder return in 2021 was better than that of GM’s or of S&P500.
As for DuPont ratios, Tesla showed significant improvement in comparison with previous years. In particular, Tesla’s returns on equity grew from 3% in 2020 to 17.5% in 2021, its returns on assets grew from 1.3% to 8.9%, and the profit margin grew from 2.2% to 10.3%. At the same time, the equity multiplier decreased from 2.3 to 2, which demonstrates a decreased reliance on debt. Tesla has also outperformed GM in all the measures mentioned above. For instance, GM’s return on equity (15%) was lower that that of Tesla (17.5%) in 2021. GM’s return on assets (4%) was more than twice as low as that of Tesla’s (8.9%), and GM’s profit margin was 7.75%, which is lower than 10.3% of Tesla’s profit margin.
Thus, considering Tesla’s performance in terms of shareholder’ return, efficiency, and profitability, it may be said that the company demonstrated outstanding performance in 2021. Thus, it is recommended to invest in the company’s shares.
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