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Lets talk about the recent stock market valuation of Tesla, the stock price, and whether or not it’s overvalued – enjoy! Add me on Instagram: GPStephan
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Just in an effort to be COMPLETELY transparent, so you know my affiliation before watching this video – YES, I do own a Tesla Model 3. YES, I bought Tesla stock awhile ago at $260 a share, and YES I’m still holding on to it.
But, what about Tesla, and current price TODAY…is it REALLY worth what it’s trading at?
If you’re PESSIMISTIC on Tesla, you’ve got quite a few arguments to back up your reasoning:
One, at this level, Tesla is valued at MORE than Ford, GM, and Chrysler…COMBINED. And that could be concerning when you consider that Tesla only delivers a FRACTION of the cars that nearly every other automaker produces.
Tesla’s Global Deliveries Compared to the Top 10: Volkswagen, Toyota, GM, Ford, Honda, FCA, Mercedes… Here’s the Chart
Second, Tesla shares are trading at 85 times the projected $1.4 Billion Dollars of earnings in 2020…and, again, when you compare that to ANY other automaker…it’s A LOT.
Third, Tesla has only barely turned a profit…and even though things are OPTIMISTIC, there isn’t enough history behind the company to guarantee that this will continue, and demand will continue, for the foreseeable future and beyond.
Fourth….Tesla is expected to face more and more competition from automakers who want to take away marketshare. And automakers all agree…electric cars are going to be the future, so they’re sinking a LOT of money into EV development.
That might cause one to believe that…based on quite a few factors…Tesla is OVERVALUED, and to reach a valuation similar to other automakers, Tesla would have to continue posting many years of 50% year over year growth in order to “Grow Into” what it is today.
However, the people who are OPTIMISTIC about Tesla would argue entirely differently – and would see it as UNDERVALUED.
Tesla focused on the technology – Their proprietary technology is why Tesla gets significantly more range than other, competing car companies…and not only that, but Tesla’s batteries are less expensive to manufacture, which would lead them to even further profit.
Second, one can argue that Electric Vehicles would be a similar adoption to that of the internet, or smartphones, or even the television when it first came out…and this follows an S-Curve of growth.
Third, Tesla is expanding with no stop in sight. They’re pushing out even more cars, they’re coming out with new concepts, and they’re expanding their manufacturing over the next few years. They’re also one of the few car manufacturers to post consistent growth in this space, while every other automaker has largely “Failed” at producing their own electric car.
Fourth, arguably…Tesla can move pretty quickly. It doesn’t seem as though they have a chain of command like other companies – instead, it’s Elon Musk and his crazy visions – and then, people just make it happen.
And finally…from my own, anecdotal experience…Tesla is a good product, and I didn’t fully “understand it” until I bought one.
And my thoughts, as far as where we’re at right now…even as a Tesla owner and stock holder…I can’t help but think a lot of this recent value is pushed more so by hysteria and excitement over making money, than it is about the prospect of Tesla overtaking the planet.
Now, that’s not to say that Tesla doesn’t have INCREDIBLE technology…and there are a LOT of promising features to come in the near future, like full self driving…or, maybe one day, autonomous Tesla Model 3 taxis. But right now…I think there’s still quite a few things that will need to happen, first, before we get there.
But who knows…maybe one day, we’ll all be driving Teslas…on the moon.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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