How Tesla Is Heinously Overvalued In One Chart (Much Like Most Of The Market)
The entire "market", if you can still call it that, could really crash at any moment. I have next to no faith in most of the listed companies to actually produce any real return on investment once adjusted for inflation.
I could go on and on about the reasons for this (a dead horse I've been beating for a decade since "the bailout"), but that's less fun and requires more brainpower than looking at a couple of simple charts.
First, let's take a look at how much Tesla "makes" each quarter:
Tesla does appear to be doing one thing well - losing money! I guess it's a good thing they get lots of it free from the government (much of which is loaned to other Musk companies at a profit, on the taxpayer's dime.)
If that wasn't enough to scare Tesla holders, surely this chart will be:
Recently, I was at a Porsche dealership. Flush with bitcoin money, I was temporarily able to appear to be someone who might purchase a car, and would therefore be indulged in a test drive or three. The mechanic and salesman working on a 911 there regaled me with tales of how Teslas are "Frankencars", made from various pieces purchased from other automakers. Notably, they seemed offended at the use of a Mercedes steering column and wheel assembly. They assured me that as a sports car, aside from the inherent strengths of an all-electronic engine, Teslas were not exactly finely crafted works of art.
So, if they aren't going to be in the sports car hall of fame, who is the target market? Apparently, it's lovers of tax breaks...and they are a fickle bunch.
It's not going to look good when that happens in the USA...
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Several of my financial newsletters have laid out this same case, but the data you show is new. Excellent information, especially the graph showing when the subsidies are projected to come off.
The tech companies create technology and a vision for how the world will be and then use their platform to convince the world to adopt it. It has set up massive investment into EV and autonomous vehicles where the traditional OEMs must spend resources they don't have to hedge against their gasoline fueled powertrains/vehicles. The initial premise for EV vehicles is the global warming lie. Take this away and they don't make much sense at all.
In my humble opinion, electric vehicles and their rich cousin the autonomous vehicle will remain a niche for a very long time. Their limited range, charging times and cost premium will hold it back as governments stop giving them a discount through tax payer incentives.
The automobile is one the most expensive consumer goods and its price is elastic; raise the price and its demands takes a dive. That's one of the reason the automobile sector is one of the worst places to invest. Global overcapacity, massive capital outlays, growing costs from recalls and significant risks that consumers don't want their latest offering (FCA canceling their 200 series sedan and their Dodge Dart small car after just 1 year in production). At a time when car loan default rates are increasing and vehicle sales are rolling over, over 100 new EV vehicles being planned, it's a deadly risk that anyone will bye them when the next recession hits end of 2019.
"It has set up massive investment into EV and autonomous vehicles where the traditional OEMs must spend resources they don't have to hedge against their gasoline fueled powertrains/vehicles."
The government loves to pick winners and losers. Most of us here at Steemit are against these sort of distortions, philosophically.
" electric vehicles and their rich cousin the autonomous vehicle will remain a niche for a very long time. "
I agree that the EV tech is not there yet. It's not efficient without subsidy.
However, I'm more cautiously optimistic on self-driving vehicles. That could reduce emissions as much as EV, or maybe even more, just from efficiency gains...and frankly, I'm awful tired of being the driver on road trips.
"The automobile is one the most expensive consumer goods and its price is elastic; raise the price and its demands takes a dive. "
Far too many used ones around from dealers pulling forward demand, car rentals off fleet, lease returns...new cars are a pointless luxury at this point.
"Dodge Dart"
Be still, my broken heart. Take the Neon too. Please.
Excellent comment, thanks! (Looks like I +1'd your rep.)
yhoo shows a PE of -71 and the price is $345 nowadays. Just bizarre. The Jan 18, 2019 put is $10 for the $200 strike price. So if TSLA goes down to $100 that's a 10-bagger. I'll be watching the LEAPS for this one..... The market as a whole is ridiculous.....
Lol, -71. I guess hiring an unqualified CEO for PR/optics didn't work out so hot for them.
That's ok, they only paid Marissa Mayer 260 million to totally destroy what was left of the company:
"Mayer performed the worst of all public tech company CEOs with a 32.8 rating out of 100, falling short of the industry's 69.7 average rating. While tech leaders represented nearly half of the 50 most likable CEOs of U.S. public companies, the Yahoo executive also earned the second-lowest rating of all public company CEOs — just one ranking above United Airlines CEO Oscar Munoz."
"Mayer's low rating might not come as a surprise to most, as she has been widely criticized for her leadership since becoming Yahoo's chief executive in July 2012. After demanding that the company's remote employees resume working from the office, routinely arriving late to meetings and being called a micromanager by Yahoo insiders, Mayer has not gotten much of a break from public and employee disapproval."
https://www.cnbc.com/2017/05/31/why-yahoo-ceo-marissa-mayer-is-the-least-likable-ceo-in-tech.html
That's what virtue-signalling and listening to SJWs gets you.
Well stated.
Well stated.
Its apparent that eventually the show will end, now what is going to happen to the millions invested into this stock... to quote lexiconical, this might end up in a "Purge" kind of scenario... I had a chance to jump on 3 years ago when I could have afforded to buy some decent shares, I kick myself in the ass almost every day... by now I would have cashed in the chips and gotten myself some crypto... that being said... this probably will continue for years to come, its just too risky to jump for me now... I believe a few months back the had a bit of a pullback just because Elon said on an interview that the stock was overpriced, which was him trying to be honest... he got roasted by the stock holders calling him a traitor and what not... he was just stating the facts...
The stock market is a funny place...
" I had a chance to jump on 3 years ago when I could have afforded to buy some decent shares, I kick myself in the ass almost every day..."
Eh, don't bother, Bitcoin would have done much better! We all could have been millionaires if we knew the future.
"this probably will continue for years to come"
The market can stay irrational longer than you can stay solvent.
"Elon said on an interview that the stock was overpriced, which was him trying to be honest... he got roasted by the stock holders calling him a traitor and what not... he was just stating the facts..."
Haven't you noticed, our culture hates facts? It's now feels = reals. If you feel it, it must be true.
Great report as always. We have come to expect nothing less.
You did an awesome job of destroying TESLA in just a few charts.
Once Trump figures out how to stop the subsidies from flowing, Elon Musk will come to a screeching halt in 0.32 milliseconds flat.
I wouldn't hold my breath at any potential corporate disengagement from the government teat.
And you have convinced me to pull back on my allocations to ARKK.
That thing holds a lot of TESLA, 6% range or so last time I looked at details.
I guess you've gotta hold something...
Netflix is another one that doesn't make money. I bet they have that too.
by the time i get to these uve already written them up
Its seriously crazy everything is run off of credit and fake money anymore and the government just keeps printing it. It really feels like we are moving towards some serious hyper inflation here shortly and one of the reasons I am investing so heavily into crypto to try and offset it.
Tesla is a very very clear example of this and your charts really lay it out. Plus hearing that its just random parts slapped together really makes you start wondering about these crazy over priced cars.
None of this is going to end well, but I'll be damned if I have any idea when it's going to blow up.
I would have thought it should have already happened by now.
better early than never
Slapped together doesnt sounds like a $150K car. You should see how many idiots living in DFW that think Tesla is the bees knees
I bet they aren't engineers!
I fully agree with you, that tesla is waaay to overvalued now. But so are most of the stock markets now. Im quite negative about their current statistics, however not their revenue.
Their revenue has 5 fold in the past three years. That is what people are speculating on that tesla will keep growing.
We need to keep in mind, great companies like Amazon, had a long period of losses too. So investing in Tesla is risky, however this is one of companies that could pay off a lot.
Amazon still hasn't really made that much money...probably way overvalued also.
Nice post. Tesla is a Unicorn, a mythical and magical creature, the stuff of fairytales....and it's not the only one.
There are a few people I know who need to read this one. Might have to even link it up on Ye Olde Facebook
Into the den of lions, then...
Wow .. I didn't know Tesla was doing that bad in the market. I guess because of their good marketing, it all seems that they are doing well. But on the background, thanks to your post, we can see that the struggle has already started. If Tesla failed, that would bring people to try alternatives .. Hence crypto world =)
It also helps that what I showed above (bubble, momentum stocks with garbage fundamentals) is pretty common right now.
Brings to mind the phrase "cleanest dirty shirt in the laundry."
With enough lipstick, any pig can win the beauty contest at most county fairs
That's a colorful way to put it!
Hahaha nice one =D.
Sure your post brings things clearly and it's a bit of surprised as I said
Hah, that kid looks a little like Musk I guess.