Tesla’s build quality was always in doubt but people were willing to overlook this fact. Now only the most ardent fanatics who live in Elon’s reality distortion field, of which I doubt there are many due to his deeply flawed personality, will buy his car.
We are witnessing Elon’s house of cards coming down. Remember Elon Musk has massive loans with Tesla as collateral and a collapse of Tesla’s share price will absolutely affect his other ventures.
Unfortunately probably SoaceX as well. But think medium term this could be a good thing - new space is thriving and do we really need a gorilla in the room?
I think, the consensus is that Tesla would have to be at least as low as around $100-$120/share before there is a margin call on Musk's debt (with Tesla stock as collateral). So it will still have to drop 50% from current levels for the house of cards to start collapsing. But I guess nobody outside Musk and the bankers know the actual price point.
Is it possible -- Yes, but not super likely in the near term.
Why not? Even at 50% of its current valuation, Tesla’s market cap would still be twice as high as Toyotas. Doesn’t sound reasonable to me, considering their sales are tanking…
Tesla is outrageously overpriced as an auto manufacturer.
Most other manufacturers currently have a P/E ratio around 10. Tesla is around 120. Yes, you read that right --- about 12X higher than the competition.
To justify it's current valuation, Tesla would have to capture a majority of the global market and become the world's most popular car brand. It currently has around 12% of the global market.
In my opinion, what Tesla has to offer just isn't that good and is being rapidly surpassed.
The thing is that Tesla isn't priced as car marker, and hasn't been for a long time. People still also talk about Tesla as an AI-company, robot-inventor, battery and solar cell producer, and potential ride-hailing company.
Like you, I don't think it makes sense, but apparently the market sees it differently.
And until that perception changes, I don't think the valuation will drop to less than half.
but that is what the stock market is :) you do not purchase shares on any company because of what they are now (unless P/E ratio is negative :) ), you are investing in the future of the company. I wouldn’t touch Tesla with a wooden stick but you are arguing against basic economics.
Actually, Tesla shareholders are the ones arguing against basic economics.
Tesla is no longer a "growth stock". Most industry observers are predicting a significant decline in sales for the current quarter. There is no reasonable data or even projected data to support a 12x valuation.
at the current evaluation there never was… tesla investors are suckers for elon’s “robo”taxi and humanoid robots and I am sure something “amazing” is coming on the next earnings report :)
Not exactly. Word on the street is that Tesla stock was heavily short-sold at one time, as it was expected to be headed for bankruptcy. When it turned out to not be headed for bankruptcy, those who had shorted were forced to either close their positions (raising the stock price as their demand hit for shares hit the market) or cover (pay to keep their short agreements going) for an extended period of time. But it wasn't a one-time event; as the price rose, and time went on, more of those who'd shorted Tesla found their position untenable, which forced them to finally close, further raising the price.
Elon famously derided the investors who'd caused this situation. He was livid at them, and also at the SEC for allowing what he considered to be unfair, if not illegal, conduct on the part of short-sellers. A stock that is heavily short-sold can have its price drop to the point that financing is difficult to obtain, sounding the death knell for that business. But it looks like that came back to bite shorts when Tesla survived.
This is definitely a bit of a crackpot theory without some numerical analysis to back it up, but mindless "pure hype" seems a less compelling explanation for the valuation we see than financial/securities shenanigans, especially after what happened with Gamestop.
No, they're quasi-legal positions, often between private parties and undisclosed to the public, whose stipulations require further positioning that can move markets in unexpected and unexplainable ways. Hype is emotional, this is reason, albeit flawed because of incomplete information. Tesla shorts reasoned that an electric car company, a sector segment that has never been successful, was doomed; they short-sold the stock expecting never to have to close their positions, as bankruptcy would result in cancellation of Tesla's shares. That didn't happen; they didn't understand that there was a demand for the kind of vehicle Tesla sold, how much money Musk was willing to pour into the company to keep it afloat, etc. So the price rise would be a result of reconciling their bad bet with the market.
Which only further enhances the overall point, there is no reasonable auto marketplace data (actual or even projected) to support the current valuation.
The "Magnificent 7" should really only be 6 with Tesla being the odd one out.
Some of the reports on it from stock market "analysts" are almost comical and often rely on an appeal to tradition --- it's always been this way. Exactly the sort of nonsense cold hard "analysis" is supposed to cut through.
It's as if there is some significant pressure to emotionally support the big investors that are heavily bought in.
If TSLA were priced like a car maker it would be $10. Direct sales and the charging network, could, generously, make it $30. Which would ignore the existential threat of Cybertruck. If the Rivian R2 had been Cybertruck, we'd be posting about the liquidation auction.
Frankly speaking, I read about Musk going bankrupt every month since Tesla's were introduced, than SpaceX was supposed to sank Musk (until it turned out that it and Virgin "disrupted" space industry), than Twitter purchase, now we have Cybertruck.
Not being a fun of Musk as a person (as I am not fun of B. Gates or S. Jobs) I do appreciate that he delivered a breakthrough in at least two industries that were considered staled, unapproachable and closed to existing players (space and automoto). So I will give that Cybertruck a benefit of doubt.
The fundamentals have changed. Sales are tanking. I’m guessing the share price is being propped up by some financial shenanigans and retail investors.
FWIW I was an early investor in TSLA, back in 2012. I made 30x my initial investment. I lived the company and was a big fan of Elon until something happened to his brain.
I have observed this company for a long, long time.
Same as you, I think. Invested in 2013… I have sold more and more shares as the market cap reached ridiculous levels compared to other car companies, and as I felt Musk was over promising and under delivering more and more.
He has mislead both investors and customers for years, but his recent behavior and statements have been, at the very least, odd. Even disregarding politics, I don’t believe that he is steering Tesla in the right direction, and he is not behaving as a responsible or serious CEO with a clear meaningful vision for the company, or as someone who even cares about it.
Not sure if something happened to his brain, but it doesn’t feel normal, calm or rational.
We are witnessing Elon’s house of cards coming down. Remember Elon Musk has massive loans with Tesla as collateral and a collapse of Tesla’s share price will absolutely affect his other ventures.
Unfortunately probably SoaceX as well. But think medium term this could be a good thing - new space is thriving and do we really need a gorilla in the room?