Tesla vs Apple Stock: Any battle between Tesla and Apple stock can only be described as a clash of the Titans.
The two industry leaders are driving technological change at a never-before-seen rate. They have similar origin stories, and both were founded by brilliant minds. Both have had enigmatic leaders who inspired innovation, curiosity, and a particular talent for disrupting their respective industries.
But which stock deserves your attention most? Which is the better bet if you had to pick one, Tesla or Apple stock?
Apple’s History Is Legendary
Apple’s history is the stuff of legends. The company was founded in 1976 by Steve Jobs and Steve Wozniak, both of whom left school to pursue their vision. They were convinced that making computers standard in every home and office would transform the world, and they built their very first models in Jobs’ garage.
Since those early days, Apple has become a massive technology business. It was the first company to pass a market cap of $1 trillion, and by 2019, it boasted a market cap of $1.3 trillion. For perspective, that figure exceeds the GDP of all but 14 countries. Australia and Spain are only at $1.4 trillion.
Tesla [NASDAQ: TSLA], with a market cap of $135 billion, isn’t in the same league quite yet, but the story isn’t any less extraordinary.
The company was founded in 2003 by engineers Martin Eberhard and Marc Tarpenning. In 2004, the charismatic Elon Musk came on board. Originally, the company’s mission was relatively simple – to create a fully electric car – but today many believe Tesla’s innovations in alternative energy have potential to save the world.
In short, Musk said the company’s “secret” master plan is this:
- Build sports car
- Use that money to build an affordable car
- Use that money to build an even more affordable car
- While doing above, also provide zero emission electric power generation options
While Tesla hasn’t quite crossed the finish line yet, few people doubt it will get there.
Adding tech stock to an investment portfolio is a no-brainer, but choosing between Tesla and Apple is a tough call. When it comes to Tesla stock versus Apple Stock, which is best?
Why Apple Stock Soared Despite iPhone Slowdown
2019 was been exceptional for Apple [NASDAQ: AAPL] – on that point there is no debate. Share prices increased by 77 percent from January 2019 to mid-December 2019.
Part of the upward trajectory came from the company’s focus on laying to rest the biggest myth among investors and analysts: that profits are wholly dependent on iPhone’s success.
Considering just about everyone who wants a smartphone has one, it is unlikely that iPhones will ever see the same dramatic rise in sales they once commanded. Fortunately, Apple has proven it doesn’t carry all of its eggs in one basket.
In 2019, every division grew, with the exception of iPhones. In fact, iPhone revenues went down by 14 percent year-over-year.
Nonetheless, the other business segments increased revenues by $17 billion, coming in at a very respectable total of $118 billion.
One of the winners was Apple’s wearables, home, and accessories products, which increased 41 percent year-over-year. Another was revenue from Apple services, which went up 16.5 percent year-over-year.
Several new lines were introduced in 2019, and they promise to continue Apple’s history of market domination. Examples include Apple Card, Apple TV+, Apple Arcade, and Apple News+.
Updated versions of Apple Watches and AirPods are also on sale, and early sales figures show that consumers are delighted to upgrade.
Despite the sharp rise in stock price, most analysts are still saying buy. There is no indication that shares will ever be much lower than they are today.
Should You Invest in Tesla Stock?
Tesla stock rose at a dramatic pace in February 2020, and increased by approximately 200 percent in value over just six months.
Most of that gain – 65 percent – occurred since the beginning of January 2020. That presents a set of complex choices for current and potential investors. Those who have stock already wonder if now is the time to sell and reinvest profits, while those who aren’t yet on-board question whether this is the right time to buy.
The short answer is that there is still a huge untapped market for Tesla’s signature Model 3.
In 2019, approximately 368,000 of these vehicles were delivered, which represents a year-over-year increase of 50 percent. The Model 3 is Tesla’s biggest accomplishment, and some say it is equivalent to Apple’s iPhone breakthrough. The Model 3 made up a full 82 percent of Tesla’s total 2019 deliveries.
Tesla [NASDAQ: TSLA] reported 2019 figures of $25 billion, which is an impressive stand-alone figure. However, it is all-the-more impressive when you compare it to total revenue a mere five years ago. In 2014, Tesla achieved just $3 billion in total sales.
There is more good news for investors from the perspective of cash flow. Tesla has long had a reputation for spending billions upon billions each year. In 2019, Tesla turned that around, generating roughly $1 billion in free cash flow. Management projects that trend to continue and grow in coming quarters.
These figures, in combination with other positive financial results, have put Tesla shares at a premium.
While it appears the stock will continue to grow in value generally speaking, some believe there is potential for minor drops along the way.
Investors who are concerned that shares are currently overpriced may want to give it time to see if there are bargains to be had. However, waiting is a risky decision, as it is just as likely this is the lowest these shares will be for some time.
Apple vs Tesla Stock: Pros and Cons
By all appearances, both Apple [NASDAQ: AAPL] and Tesla will continue to bring the most innovative products to market in their respective industries.
Both are making massive waves in the status quo, and Tesla is likely to be an important player in the eventual transition to renewable energy. Either option is a smart long-term buy.
Short-term, Tesla isn’t moving as quickly as Apple in terms of developing products that meet the needs of large swaths of consumers.
For the most part, Tesla vehicles are still too expensive for the average household. That is expected to change in coming years, and when it does, Tesla could grow exponentially.
In the meantime, it appears that Tesla [NASDAQ: TSLA] could experience a market correction – and in fact, a number of hedge funds are betting big on that exact scenario. As a percentage of total available stock, only one percent of Apple’s is sold short, as compared to a full 20 percent of Tesla’s. What that says is that investors with a shorter-term outlook may be better off with Apple.
Apple vs Tesla Stock: The Bottom Line
For some investors and analysts, the question boils down to this: Is Apple’s Time Cook or Tesla’s Elon Musk more likely to take growth and profit to the next level? It’s a tough call.
The bottom line is that both companies are positioned for long-term success. However, if you must choose between them, Apple [NASDAQ: AAPL] is likely the better option.
It appears to be priced appropriately based on current financials, while there is a significant collection of market experts who believe Tesla is overvalued.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.