Tesla: Some Perspective

I’ve been asked about Tesla several times the last few weeks so time for an update. This is a wonderful discussion that provides some perspective on the economics of automakers in general and the highly improbable events that would have to materialize to justify a valuation for Tesla at even 1/10th its current value.

In Mid-November it was announced that Tesla would be added to the S&P 500. Tesla stock is up over 70% since the announcement…not because of any fundamental change in the company, mind you, but simply because of speculators front-running index funds’ required purchases at any price.

The gain since the announcement alone in one month’s time (adding almost $300 billion of market cap) amounts to more than the entire Toyota company! Think about that for a moment. Tesla has added the value of the world’s most profitable and largest automaker in the blink of an eye on no fundamental news whatsoever. Continue reading “Tesla: Some Perspective”

Tesla Q2 Earnings Update

Yesterday, Tesla released their Q2 earnings. I believe we are witnessing an extremely interesting case study in real-time that will be studied by future generations of investors and business students. So, I will continue to comment on it in real-time. There is simply so much to learn from this case, and it’s not often we have the opportunity to witness such an interesting situation as it unfolds.

Tesla closed yesterday with a market cap (the total value of all outstanding shares of stock) of about $300 billion and a per share price of $1,592. To put that in perspective, BMW’s market cap is about $40 billion. So, Tesla’s stock is worth about 7.5x that of BMW’s with just 1/7th the global sales! Continue reading “Tesla Q2 Earnings Update”

Tesla Update #3 – Most Valuable Automaker in the World?!

This is now my third Tesla update commentary. Below is a chart showing the price of Tesla for the year along with dates of the previous two commentaries.

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Tesla has set another milestone by becoming the MOST VALUABLE AUTOMAKER IN THE WORLD! As I write this sentence, Tesla is trading at about $1,300 per share, which equates to over a $240 billion market cap! Continue reading “Tesla Update #3 – Most Valuable Automaker in the World?!”

Tesla Update

Back in February I did something rare (for me) and wrote about an individual stock, Tesla. I essentially pointed out the absurdity of the valuation based on Tesla’s revenues, earnings, margins and vehicle sales in the context of the industry.

That was written on February 4th upon which Tesla ticked a high price of 968.99. Over the next two months Tesla’s stock price proceeded to decline over 60% to $350. The stock has since rallied to over $800 as I write this. What a ride.

Last night, Tesla reported Q1 earnings. As usual, there are some inconsistencies and concerns in their financials so let’s take another look to see if the $800 per share price is justified. Continue reading “Tesla Update”

Tesla…To The Moon!

Today, I’m going to do something I’ve never done before. I’m going to comment on an individual stock.

Since I generally don’t make recommendations on individual stocks for clients, I don’t focus my commentaries on them. However, I’ve been following this company closely for a couple years now, and the situation has become so ludicrous that I feel the need to highlight it. This could be one of those rare examples that go down in history as a great learning lesson. Continue reading “Tesla…To The Moon!”