BYD Co. and Tesla Inc. are competing head to head in China’s electric-vehicle market, but the US EV maker is a clear winner when it comes to stock performances.
(Bloomberg) — BYD Co. and Tesla Inc. are competing head to head in China’s electric-vehicle market, but the US EV maker is a clear winner when it comes to stock performances.
Shares of Tesla have rallied 127% this year in the US as price cuts boosted deliveries and its artificial intelligence potentials triggered frenzied buying. That trumps a 37% gain for BYD in Hong Kong through Tuesday. While a stellar performance as the Chinese EV leader posted a surge in sales and expanded footprint overseas, Berkshire Hathaway Inc.’s reduction in stake has created headwinds.
Tesla’s rally comes after a 65% loss in 2022, which was the worst annual performance for the stock. Its lead this year could narrow on signs of overheating. Shares were in overbought zone again on Monday and the percentage of analysts’ sell rating has climbed to 18.4%, the highest since September. The consensus target price over the next 12 months is 22% below current levels.
In contrast, BYD doesn’t have a single sell recommendation and analysts’ target points to a 30% upside, according to data tracked by Bloomberg. Citigroup Inc. opened a positive catalyst watch on Wednesday, expecting a jump in BYD’s second-quarter net profit and an improvement in monthly deliveries through the end of 2023.
“If I were to choose between the two, I would be putting my money on BYD as Tesla’s valuation is way too expensive,” said Dickie Wong, director of research at Kingston Securities Ltd. Tesla trades at 67.4 times forward earnings, compared with 24.8 times for BYD.
(Updates with more context and Citigroup’s research note.)
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