Tesla, Inc. (TSLA)vs Netflix, Inc. (NFLX)

Quick verdict

Tesla and Netflix operate in different sectors but both carry above-market volatility, with betas of 1.802 and 1.517 respectively. Tesla trades at a stretched 316.42x trailing P/E and 26.25x forward P/E, alongside a negative PEG of -8.1, reflecting a -47.09% three-year EPS CAGR. Netflix's 21.82x trailing P/E, 32.49x forward P/E and 0.64 PEG appear better supported by 15.85% three-year revenue growth and 27.09% EPS growth. Netflix also leads on profitability, posting a 29.72% operating margin and 47.92% ROE versus Tesla's 5% operating margin and 4.79% ROE. Verdict grades favour Netflix on valuation (B), growth (B), quality (B) and momentum (B), with an overall score of 5 versus Tesla's 1. Tesla's relative strength lies in income metrics, supported by a 3.34% buyback yield and 44.83% payout ratio.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Tesla, Inc. designs, manufactures and sells electric vehicles globally, complemented by energy generation and storage products, placing it in the Consumer Cyclical sector under Auto - Manufacturers. Its revenue is tied to vehicle deliveries, production scaling and energy segment expansion, which have shown volatility, evidenced by a -2.93% three-year revenue CAGR alongside a 3.84% five-year figure. Netflix, Inc. is a global entertainment provider within Communication Services, generating revenue primarily through subscription streaming. Its model has delivered more consistent top-line expansion, with a 15.85% three-year revenue CAGR and 16.79% five-year CAGR. The two businesses differ structurally: Tesla's model involves capital-intensive manufacturing with hardware and energy exposure, while Netflix operates an asset-lighter content and distribution model, reflected in its considerably higher gross margin of 49.03% versus Tesla's 19.07%.

Valuation

Tesla's valuation multiples are elevated across the board: a trailing P/E of 316.42x, forward P/E of 26.25x, price-to-sales of 14.61x, price-to-book of 14.64x, and EV/EBITDA of 117.92x. Its PEG ratio of -8.1 is not meaningful given negative earnings growth trends. Netflix's multiples are comparatively lower, with a trailing P/E of 21.82x, forward P/E of 32.49x, price-to-sales of 6.19x, price-to-book of 9.35x and EV/EBITDA of 9.66x. Netflix's PEG of 0.64 suggests its valuation is more closely aligned with its growth profile than Tesla's. Free cash flow yields are similar, at 4.45% for Tesla and 4.38% for Netflix. The valuation verdict grade is B for both, though the underlying figures indicate Netflix's pricing is more directly supported by its growth and earnings trends.

Growth profile

Tesla's growth metrics show contraction over the recent period, with a three-year revenue CAGR of -2.93% and a three-year EPS CAGR of -47.09%, though the five-year figures are positive at 3.84% revenue and 2.68% EPS. Netflix shows more consistent expansion across timeframes, with three-year revenue CAGR of 15.85%, five-year revenue CAGR of 16.79%, three-year EPS CAGR of 27.09% and five-year EPS CAGR of 14.39%. Both companies carry a growth verdict grade of B, but Netflix's underlying trajectory has been steadier and less volatile across the metrics provided. Tesla's recent EPS decline stands out as the most significant growth-related figure in the dataset, indicating a sharp reduction in profitability growth relative to its five-year trend.

Profitability and quality

Netflix demonstrates stronger profitability across all margin measures: a gross margin of 49.03%, operating margin of 29.72% and net margin of 28.52%, compared with Tesla's 19.07% gross margin, 5% operating margin and 3.96% net margin. Return metrics follow the same pattern, with Netflix's ROE of 47.92% and ROIC of 24.36% substantially exceeding Tesla's ROE of 4.79% and ROIC of 3.18%. Both companies carry a quality verdict grade of B, though the magnitude of difference in margins and capital returns is notable. These figures suggest Netflix converts revenue into profit and shareholder returns more efficiently than Tesla at current levels, based solely on the metrics supplied.

Balance-sheet risk

Tesla holds $66,085,799,536 in cash against total debt of $29,633,625,587, producing net debt/EBITDA of 1.01x, a current ratio of 2.04 and interest coverage of 28.11x. Netflix holds $79,908,600,905 in cash against higher total debt of $115,687,663,564, but with net debt/EBITDA of -0.82x (net cash position), a current ratio of 1.14 and interest coverage of 21.13x. Both carry a balance sheet verdict grade of B. Tesla's current ratio indicates stronger short-term liquidity, while Netflix's negative net debt/EBITDA reflects a net cash position despite carrying more absolute debt. Interest coverage is comfortable for both companies at current levels.

Price performance and shareholder returns

Tesla's share price performance has been mixed: a -18.98% year-to-date return, +19.92% one-year return, +47.68% three-year annualised return, but only +0.35% annualised over five years, alongside a maximum five-year drawdown of -63.77%. Netflix's returns have been stronger across most horizons, with +45% year-to-date, +106.6% one-year, +38.86% three-year annualised and +30.63% five-year annualised returns, alongside a smaller maximum drawdown of -57.42%. Both stocks carry a momentum verdict grade of B. The data indicates Netflix has delivered more consistent multi-year returns with a somewhat smaller peak-to-trough decline over five years compared with Tesla.

Which stock fits which investor

Based on the supplied verdicts, Netflix is flagged as best suited to investors prioritising value, growth and quality, supported by its B grades in valuation, growth and quality alongside an overall score of 5 versus Tesla's 1. Tesla is flagged as best suited to income-focused considerations, carrying an income verdict grade of A versus Netflix's B, driven by its 3.34% buyback yield and 44.83% payout ratio, though Netflix also offers a dividend yield of 1.77% versus Tesla's 0.37%. Both are tagged as high-volatility names, with Tesla described as mature, high-volatility and Netflix as high-quality, high-volatility, reflecting their respective beta levels of 1.802 and 1.517.

• Value: NFLX
• Growth: NFLX
• Income: TSLA
• Quality: NFLX

Frequently asked questions

Which stock has a higher valuation, TSLA or NFLX?

Tesla's valuation multiples are considerably higher, with a trailing P/E of 316.42x and EV/EBITDA of 117.92x, compared with Netflix's trailing P/E of 21.82x and EV/EBITDA of 9.66x. Both carry a valuation verdict grade of B, but Netflix's PEG of 0.64 versus Tesla's -8.1 indicates a closer link between price and growth for Netflix.

Which company has grown revenue faster, Tesla or Netflix?

Netflix has grown faster, with a three-year revenue CAGR of 15.85% and five-year CAGR of 16.79%. Tesla's three-year revenue CAGR is -2.93%, though its five-year figure is positive at 3.84%, indicating recent deceleration.

Which stock is more profitable?

Netflix shows higher profitability across all measures supplied, including a 29.72% operating margin, 28.52% net margin, 47.92% ROE and 24.36% ROIC, compared with Tesla's 5% operating margin, 3.96% net margin, 4.79% ROE and 3.18% ROIC.

How do the balance sheets of TSLA and NFLX compare?

Tesla has net debt/EBITDA of 1.01x and a current ratio of 2.04, while Netflix has a net cash position with net debt/EBITDA of -0.82x but a lower current ratio of 1.14. Both carry interest coverage above 20x and a balance sheet verdict grade of B.

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