3 Underappreciated Risks to Tesla's Stock Price

Shares of Tesla (NASDAQ: TSLA) surged higher during the several days following the release of the company's fourth-quarter report. The Palo Alto, California-based automaker beat both earnings and revenue estimates.

Tesla reported non-GAAP earnings of $2.14 per share. This came in ahead of analysts' consensus estimate by $0.38 per share. Revenue of $7.38 billion also exceeded Wall Street's expectations by $300 million as the company delivered 112,095 vehicles during the quarter.

However, investors should wonder if this report justifies further moves higher in Tesla stock. At first glance, it might. The forward price-to-earnings ratio stands at just above 50. As of the third quarter of 2019, the average P/E ratio of the S&P 500 was 22.4, making Tesla's multiple appear high. Despite this, analysts expect profits to increase by 388.1% this year and 108.6% in 2021. Given that kind of growth, Tesla stock may look cheap.

Source Fool.com