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That quote actually seems quite unfair to me. If "most" cars are to be electric in 10 years, and "most" of those are to be made by Tesla, then Tesla would have
by nkoren 8y ago
That quote actually seems quite unfair to me. If "most" cars are to be electric in 10 years, and "most" of those are to be made by Tesla, then Tesla would have captured more than a quarter of the world's auto sales, and thus should be worth 25% as much as the entire auto industry. Less some appropriate discount rate, but plus the value of any suppliers that Tesla's greater degree of vertical integration has taken out of their supply chain, and plus the value of any non-automotive profits they make (grid storage etc.).
If one truly believes that Tesla will capture 1/4 of the world's automotive market as well as find success in non-automotive applications, then the current stock price is woefully undervalued. To merely believe that their current price is justified requires much less bullishness than that.
- pwinnski 8y agoI think the point is that the chance of all of those IF conditionals being true is close to nil, which means that Tesla is currently over-valued.
- nkoren 8y agoNo, it says that for the present valuation to be fair, then all those conditions must be true. But if all those conditions were true, then Tesla would control at least a quarter of the global automotive market, and its valuation would be considerably higher. Obviously not all of those conditions will be true, however -- only the craziest Tesla bulls would argue that. Conversely, if none of them are true, then Tesla is definitely over-valued. But I think you'd have to be a pretty crazy Tesla bear to make that argument. Finally, if those conditionals are a mix of true and false... well, that doesn't really doesn't tell you much about Tesla's fair market value, which is why I don't think this is a particularly useful analysis.