The S&P 500 saw a remarkable 23% return over the last year, largely driven by tech giants such as Tesla and Meta Platforms, both of which experienced significant growth. Tesla’s stock surged over 60%, but is currently facing challenges as its sales have significantly declined. The company sold around 1.79 million vehicles in 2024, marking the first annual dip in sales since the launch of its Model S in 2011. This short-term setback has raised concerns among investors as passenger EV sales make up 78% of Tesla’s revenue. With declines reported in key markets, including Europe and Australia, there are doubts regarding a sales recovery.
Despite this, Tesla holds potential in upcoming technologies such as its AI-driven full self-driving software and the anticipated Cybercab and Optimus humanoid robot. These innovations could drastically reshape the company’s revenue landscape. According to analysts, the Cybercab, operating autonomously within a ride-hailing network, could significantly increase Tesla’s profitability by 2029. On a broader scale, Elon Musk believes Optimus could generate unprecedented revenue in various sectors.
On the other hand, Meta has been leveraging AI to enhance user engagement across its platforms. With over 3.3 billion daily users, Meta’s strategy focuses on maximizing online engagement to boost revenue from ads. The Meta AI chatbot has gained traction with 700 million monthly users, contributing to a record $164.5 billion in revenue for 2024, reflecting a 22% increase from the previous year.
When comparing valuations, Tesla’s high price-to-earnings (P/E) ratio of 173.3 stands in stark contrast to Meta’s more modest 29.1. This suggests that while Tesla’s stock has soared, its current market price may not be justified given the recent sales decline. Meta, however, appears to offer a more attractive investment opportunity moving into 2025, given its solid growth trajectory and lower valuation.
In summary, while both companies have significant potential, the current data suggests that Meta might present a more realistic and promising investment in the near term as it continues to grow and innovate, compared to Tesla’s more uncertain sales outlook. Investors are keeping a close eye on these developments as they assess their portfolios for the coming year.