I Dun Think Tesla Is Worth $160. My Reasons...
In my previous post (click here to read!), dated 17 Apr 2023 I have listed in details why I will not invest in $Tesla Motors(TSLA)$ regardless how “inexpensive” the stock could end up becoming.
Having said that, I think I could still give my 2-cents worth about “.. buying Tesla at $160 and at what price will you buy Tesla ?
Tesla used to be one of the most innovative and “exciting” companies in the world.
Of late, it has become a more volatile and controversial stock in the market.
Its stock price has fluctuated wildly over the years:
Reached a record high of $498.32 (after its 1-for-5 split on 31 Aug 2020)
Reached a high of $300 (after its 1-for-3 split on Mar 2022).
Reached a low of $108.10 on 03 Jan 2023 when it failed to meet Wall street expectations on its quarterly earnings results.
Tesla's stock performance is largely driven by its “visionary” owner and CEO, Mr musk.
He has ambitious plans to revolutionize transportation, energy, and space exploration.
His bold vision however also comes with :
Significant risks and challenges
Production delays eg. 7 years overdue (autonomous driving).
Quality issues eg. steering wheel detached from spoke while driving.
Legal battles.
Regulatory hurdles
Fierce competition from other automakers and tech giants.
Tesla's fans and critics have different opinions on whether Tesla is a good investment or not.
Some choose to believe that Tesla is a game-changer that will dominate the future of mobility and clean energy. That is why they are willing to pay a premium for its growth potential and innovation.
Others think that Tesla is overvalued and whatever advantages it currently enjoys, they will diminish over time because other EV makers will catch up ultimately. Until then, others are looking for a bargain price to buy Tesla shares.
What Is Tesla’s Fair Value?
For an educated estimation, I think looking at Tesla's historical price-to-earnings (P/E) ratio may give a clue.
On 20 Apr 2023, Tesla's P/E ratio was 47.99.
This means investors were paying $47.99 for every $1 of earnings per share (EPS) that Tesla has generated in the past 12 months.
This is significantly higher than the average P/E ratio of the auto industry at 13.76 (on 20 Apr 2023); clearing implying that Tesla is overpriced comparatively speaking.
At the same time, if we compare Tesla’s 20 Apr P/E (47.99) is lower than its historical P/E (69.23).
This means that Tesla's stock price has fallen faster than its earnings growth in the past year.
This could indicate that Tesla is “undervalued” (??) compared to its own growth potential and innovation. Ironic right !
Is $160 A Fair For Tesla?
Honestly, there is no one standard answer as everyone’s risk appetite varies.
Personally, to me, at $160 a pop, it is expensive for the simple fact that as long as Tesla fails to achieve autonomous driving, it is no different from other EVs in the market, quality maybe contentious as well ?
I would be bold enough to imagine that it might test its 52-week “low” of $108 again. That’s a thought !
World First “NEW” EV Maker. And It’s NOT Tesla.
Chinese EV maker $BYD COMPANY(01211)$ has leapt past Tesla to become the new EV king, boosting its output by a massive +211% in 2022.
Given this trajectory, BYD will likely become the world’s first automaker to produce over 2 Million EVs in a single year.
To think that BYD has not make inroads to both Europe and US EV market yet.
One only need to imagine when it does, what further damage is Tesla (its stock price) looking at ? Think carefully.
Besides BYD, $Volkswagen AG(VWAGY)$ might be the other competitor that might chip away Tesla’s market share.
Afterall it is an established ICE car maker with a strong product list, long history and a strong sales network internationally.
Table's data is used to compose above Bubble Diagram
I am not the only person who thinks that Tesla stock price is “sinking” & “sinking fast” ?
The coalition of 17 major shareholders have this concern too !
Looking at the latest news, there’s trouble brewing at the horizon.
If it cannot be resolved amicably, would Tesla stock price turn a notch lower? Too early to tell for now…
Let’s sit back, relax and watch the drama as it begins to unfold in the coming weeks - shall we.
Do you think Tesla is worth $160 a share ?
Do you think Tesla stock price will dip and test its 52-weeks low of $108 again ?
Please give a “LIKe” for this post ok. Tks. Your rating is very important !
Please feel free to share or repost.
Lastly, would you consider “Follow me” so that you get first hand read of my daily new posts. Tks !
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Would you consider "Follow me" so that you get first hand read of my Daily new posts. Tks!