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It’s interesting to watch Tesla’s valuation as a slow motion train wreck. Their earnings are steadily growing and the valuation of the company is slowly droppin

It’s interesting to watch Tesla’s valuation as a slow motion train wreck. Their earnings are steadily growing and the valuation of the company is slowly dropping, so maybe we’ll eventually see on a longer timeline the price of the security approach fair value. As of writing its a bit above $150 a share based on free cash flow analysis.

paulpauper 5y ago
People have been calling it a train wreck since it went public in 2010, at just a tiny fraction of its current price. Tesla has long exhibited a tendency of suddenly surging and defying the doubters, over and over.
- anunnymouse 5y ago
  Yes that's right. The halting problem does not actually exist in the financial world.
  - rvbissell 5y ago
    I estimate 99% probability of sarcasm.
- andrewmcwatters 5y ago
  This is just lazy handwaving. There have been entire years where Tesla was below fair value. Now it’s not, and dramatically so. The price itself has nothing to do with it.
- mywittyname 5y ago
  Telsa is running out of ways to keep their stock going. Musk used some market manipulation to squeeze shorts, which propped up their stock price. Then there was the inclusion in the S&P500, which opened up the floodgates from retail investors who are forced to throw a portion of their retirement at Tesla. That helped for a while. Now it looks like they are trading/manipulating crypto prices in an effort to keep their stock price going. Telsa has absolutely defied the doubters. But I think they've reached the end of their bag of tricks. This crypto stuff might float them for another year or two, but eventually, the market is going to demand real revenue proportional to the value of the stock. When that happens, the fall is going to be epic. I wouldn't be surprised if stock plunge -> removal from S&P500 -> delisting -> private buyout at 1/1,000 of current price happens in the span of two months.
  - aeternum 5y ago
    If the EV market continues to grow by 173% YoY and Tesla continues to lead sales, then it's unlikely the market will demand real revenue for quite awhile. Investors are quite happy with companies that can maintain that kind of growth. https://insideevs.com/news/504647/global-plugin-sales-march-2021/ https://insideevs.com/news/504647/global-plugin-sales-march-...
    - rualca 5y ago
      > If the EV market continues to grow by 173% YoY and Tesla continues to lead sales (...) Tesla's market share is dropping, and it just tanked to its lowest level in two years. https://www.businessinsider.com/tesla-market-share-april-lowest-level-2-years-increased-competition-2021-6 https://www.businessinsider.com/tesla-market-share-april-low... https://www.bloomberg.com/news/articles/2021-06-02/tesla-heads-for-biggest-drop-in-3-weeks-on-market-share-loss https://www.bloomberg.com/news/articles/2021-06-02/tesla-hea...
    - rad_gruchalski 5y ago
      VW now sells more evs in Europe than Tesla. Tesla will not be able to compete with legacy (lol) manufacturers. BMW, Daimler, Toyota and GM are not sleeping either. The fall of Tesla will be of epic proportions.
      - aeternum 5y ago
        It's true that VW sells more in Europe, but is Model Y generally available in most European countries yet? Given sufficient demand, it makes more sense to sell cars locally vs. pay export and tariffs. If Tesla is still not able to compete once the Berlin factory is up and running, then I concede the point.
bob33212 5y ago
Growth Stocks are not priced based on current profits, but future growth and profits. When I bought GOOG in 2005, the consensus was that GOOG was overpriced because they didn't have a lot of revenue. When I bought TSLA in 2014 the consensus was that another automaker would beat them or buy them before they were very profitable. In 2024 when TSLA is at $1500 and people are saying that it is overpriced because it only makes 5 million cars a year, I'll still be explaining this same principal.
- andrewmcwatters 5y ago
  Maybe you missed it, that’s fair value at future cash flows at about an 8% discount rate.
  - bob33212 5y ago
    What margins and volumes on the Y, CyberTruck, and Model A, FSD subscriptions are you using in that calculation for 2025?
- rualca 5y ago
  > In 2024 when TSLA is at $1500 (...) Since the start of 2021,Tesla tanked from $880 to around $660.
- MR4D 5y ago
  But the marginal cost of an additional dollar of revenue for Google was close to zero - for Tesla it’s much higher. Google’s lead grew as it grew (Metcalf’s law). Tesla’s won’t for the same reason that everyone doesn’t want to drive the same car (a the Model T issue). [0] So we have seen this story before, but some people are attached to different points of it. [0] - http://www.autolife.umd.umich.edu/Design/Gartman/D_Casestudy/D_Casestudy3.htm http://www.autolife.umd.umich.edu/Design/Gartman/D_Casestudy...
spywaregorilla 5y ago
> It’s interesting to watch Tesla’s valuation as a slow motion train wreck. Their earnings are steadily growing and the valuation of the company is slowly dropping, Tesla is up 200% over the past year
- rualca 5y ago
  > Tesla is up 200% over the past year Tesla peaked at around 880$ on January 2021. Since then it gradually tanked to around 660$. Clearly their valuation is indeed dropping at a considerable rate.
  - spywaregorilla 5y ago
    Not really though. It's up for the month. There's a huge difference between a correction after a surge and a stock being a train wreck. That's just wishful thinking to the ethos people want to see. Go look at netflix. Is netflix a train wreck? Similar claims could be made, but they're up 9% YoY.
    - rualca 5y ago
      > Not really though. Are you actually trying to deny that Tesla's stock price did not dropped around 25% since the start of 2021? Because all you need to do to refute that is look at the stock price. > It's up for the month. No, not really. On June 1st Tesla was trading at $623 and today it's trading at $604. > There's a huge difference between a correction after a surge and a stock being a train wreck. The best thing about the stock market is that people can just put their money behind their beliefs. A tanking global market share, increased competition globally but specially in China, a 63% drop in sales, earnings with an overreliance on tax credits and crypto sales... Well, anyone decides what to do with their money.
      - spywaregorilla 5y ago
        > Are you actually trying to deny that Tesla's stock price did not dropped around 25% since the start of 2021? I'm saying that calling the stock a train wreck is wishful thinking. Crying doom and gloom because the stock is down 25% over the past 6 months when it is also up 200% from the past 12 months is some serious cherry picking. Yes, the stock was likely overvalued by hype for a period. Maybe it will continue to fall for a while. And? On June 1st it was $623. Well, in early June last year it was below $200. To call it anything but a major success is one heck of a long shot. > a 63% drop in sales I don't really follow these things but I'm pretty sure that's not correct. edit: decided to read their financial statements. Q1 2021 automotive sales appears to be up 77% YoY. To make such confident statements on the direction of a company while making basic, yet enormous mistakes like this is exactly what I mean by wishful thinking. https://tesla-cdn.thron.com/static/R3GJMT_TSLA_Q1_2021_Update_5KJWZA.pdf?xseo=&response-content-disposition=inline%3Bfilename%3D%22TSLA-Q1-2021-Update.pdf%22 https://tesla-cdn.thron.com/static/R3GJMT_TSLA_Q1_2021_Updat...

paulpauper 5y ago

People have been calling it a train wreck since it went public in 2010, at just a tiny fraction of its current price. Tesla has long exhibited a tendency of suddenly surging and defying the doubters, over and over.

anunnymouse 5y ago
Yes that's right. The halting problem does not actually exist in the financial world.
- rvbissell 5y ago
  I estimate 99% probability of sarcasm.
andrewmcwatters 5y ago
This is just lazy handwaving. There have been entire years where Tesla was below fair value. Now it’s not, and dramatically so. The price itself has nothing to do with it.
mywittyname 5y ago
Telsa is running out of ways to keep their stock going. Musk used some market manipulation to squeeze shorts, which propped up their stock price. Then there was the inclusion in the S&P500, which opened up the floodgates from retail investors who are forced to throw a portion of their retirement at Tesla. That helped for a while. Now it looks like they are trading/manipulating crypto prices in an effort to keep their stock price going. Telsa has absolutely defied the doubters. But I think they've reached the end of their bag of tricks. This crypto stuff might float them for another year or two, but eventually, the market is going to demand real revenue proportional to the value of the stock. When that happens, the fall is going to be epic. I wouldn't be surprised if stock plunge -> removal from S&P500 -> delisting -> private buyout at 1/1,000 of current price happens in the span of two months.
- aeternum 5y ago
  If the EV market continues to grow by 173% YoY and Tesla continues to lead sales, then it's unlikely the market will demand real revenue for quite awhile. Investors are quite happy with companies that can maintain that kind of growth. https://insideevs.com/news/504647/global-plugin-sales-march-2021/ https://insideevs.com/news/504647/global-plugin-sales-march-...
  - rualca 5y ago
    > If the EV market continues to grow by 173% YoY and Tesla continues to lead sales (...) Tesla's market share is dropping, and it just tanked to its lowest level in two years. https://www.businessinsider.com/tesla-market-share-april-lowest-level-2-years-increased-competition-2021-6 https://www.businessinsider.com/tesla-market-share-april-low... https://www.bloomberg.com/news/articles/2021-06-02/tesla-heads-for-biggest-drop-in-3-weeks-on-market-share-loss https://www.bloomberg.com/news/articles/2021-06-02/tesla-hea...
  - rad_gruchalski 5y ago
    VW now sells more evs in Europe than Tesla. Tesla will not be able to compete with legacy (lol) manufacturers. BMW, Daimler, Toyota and GM are not sleeping either. The fall of Tesla will be of epic proportions.
    - aeternum 5y ago
      It's true that VW sells more in Europe, but is Model Y generally available in most European countries yet? Given sufficient demand, it makes more sense to sell cars locally vs. pay export and tariffs. If Tesla is still not able to compete once the Berlin factory is up and running, then I concede the point.

bob33212 5y ago

Growth Stocks are not priced based on current profits, but future growth and profits. When I bought GOOG in 2005, the consensus was that GOOG was overpriced because they didn't have a lot of revenue. When I bought TSLA in 2014 the consensus was that another automaker would beat them or buy them before they were very profitable. In 2024 when TSLA is at $1500 and people are saying that it is overpriced because it only makes 5 million cars a year, I'll still be explaining this same principal.

andrewmcwatters 5y ago
Maybe you missed it, that’s fair value at future cash flows at about an 8% discount rate.
- bob33212 5y ago
  What margins and volumes on the Y, CyberTruck, and Model A, FSD subscriptions are you using in that calculation for 2025?
rualca 5y ago
> In 2024 when TSLA is at $1500 (...) Since the start of 2021,Tesla tanked from $880 to around $660.
MR4D 5y ago
But the marginal cost of an additional dollar of revenue for Google was close to zero - for Tesla it’s much higher. Google’s lead grew as it grew (Metcalf’s law). Tesla’s won’t for the same reason that everyone doesn’t want to drive the same car (a the Model T issue). [0] So we have seen this story before, but some people are attached to different points of it. [0] - http://www.autolife.umd.umich.edu/Design/Gartman/D_Casestudy/D_Casestudy3.htm http://www.autolife.umd.umich.edu/Design/Gartman/D_Casestudy...

spywaregorilla 5y ago

> It’s interesting to watch Tesla’s valuation as a slow motion train wreck. Their earnings are steadily growing and the valuation of the company is slowly dropping, Tesla is up 200% over the past year

rualca 5y ago
> Tesla is up 200% over the past year Tesla peaked at around 880$ on January 2021. Since then it gradually tanked to around 660$. Clearly their valuation is indeed dropping at a considerable rate.
- spywaregorilla 5y ago
  Not really though. It's up for the month. There's a huge difference between a correction after a surge and a stock being a train wreck. That's just wishful thinking to the ethos people want to see. Go look at netflix. Is netflix a train wreck? Similar claims could be made, but they're up 9% YoY.
  - rualca 5y ago
    > Not really though. Are you actually trying to deny that Tesla's stock price did not dropped around 25% since the start of 2021? Because all you need to do to refute that is look at the stock price. > It's up for the month. No, not really. On June 1st Tesla was trading at $623 and today it's trading at $604. > There's a huge difference between a correction after a surge and a stock being a train wreck. The best thing about the stock market is that people can just put their money behind their beliefs. A tanking global market share, increased competition globally but specially in China, a 63% drop in sales, earnings with an overreliance on tax credits and crypto sales... Well, anyone decides what to do with their money.
    - spywaregorilla 5y ago
      > Are you actually trying to deny that Tesla's stock price did not dropped around 25% since the start of 2021? I'm saying that calling the stock a train wreck is wishful thinking. Crying doom and gloom because the stock is down 25% over the past 6 months when it is also up 200% from the past 12 months is some serious cherry picking. Yes, the stock was likely overvalued by hype for a period. Maybe it will continue to fall for a while. And? On June 1st it was $623. Well, in early June last year it was below $200. To call it anything but a major success is one heck of a long shot. > a 63% drop in sales I don't really follow these things but I'm pretty sure that's not correct. edit: decided to read their financial statements. Q1 2021 automotive sales appears to be up 77% YoY. To make such confident statements on the direction of a company while making basic, yet enormous mistakes like this is exactly what I mean by wishful thinking. https://tesla-cdn.thron.com/static/R3GJMT_TSLA_Q1_2021_Update_5KJWZA.pdf?xseo=&response-content-disposition=inline%3Bfilename%3D%22TSLA-Q1-2021-Update.pdf%22 https://tesla-cdn.thron.com/static/R3GJMT_TSLA_Q1_2021_Updat...