General Motors vs Tesla Which Is a Better Investment?

General Motors and Tesla are two prominent players in the automobile industry, but their stock performance has taken different trajectories in recent years. General Motors, a long-established company, has a history of stable growth and dividends, appealing to conservative investors. In contrast, Tesla, known for its innovative electric vehicles, has experienced rapid stock price appreciation and volatility, appealing to risk-tolerant investors. Both companies face unique challenges and opportunities in the evolving automotive market, making their stocks a topic of interest for investors.

General Motors or Tesla?

When comparing General Motors and Tesla, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between General Motors and Tesla.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. General Motors has a dividend yield of 0.91%, while Tesla has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. General Motors reports a 5-year dividend growth of -25.03% year and a payout ratio of 5.69%. On the other hand, Tesla reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with General Motors P/E ratio at 5.32 and Tesla's P/E ratio at 100.94. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. General Motors P/B ratio is 0.83 while Tesla's P/B ratio is 18.34.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, General Motors has seen a 5-year revenue growth of 0.21%, while Tesla's is 2.63%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with General Motors's ROE at 16.37% and Tesla's ROE at 19.29%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $52.34 for General Motors and $390.85 for Tesla. Over the past year, General Motors's prices ranged from $32.83 to $61.24, with a yearly change of 86.54%. Tesla's prices fluctuated between $138.80 and $409.72, with a yearly change of 195.19%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.