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RE: Tesla Will Drop 40% By The End Of The Year
Tesla is one of those companies that is tough to bet against given the brand they have been able to achieve. Valuation truly doesn’t make sense but yet it performs much better than other carmakers. Will be interesting to watch in the coming months as it has never been through a bad economy so let’s see how that balance sheet holds up.
Very true, Tesla is a tech company and the valuation is based on future cash flow and profitability. The rest of the year will be interesting.
I'm in the auto industry... You couldn't be further from the truth when you say Tesla performs better than other car makers. In fact, I would ask you to name one way Tesla performs better than other automakers. Tesla is a complete mess of a car company.
Here are some facts:
They have $10B is debt
It starts coming due this year
They hit the 200,000 car sales limit and now the $7500 government subsidies are coming off
In the recent past South Korea had a relatively strong electric car market. When the government incentives came off, the sales went to almost zero. Cars are one of the most price elastic consumer products in the world. If you raise the price, its demand responds in a significant way.
Their market cap is bigger than BMW. Think about that...And BMW is introducing electric cars as well as every other OEM and more than 100 electric vehicles have been announced.
By 2020 the next credit cycle will likely be in rolling in. That means a recession will be around the corner. If Tesla can't make money now, how will they then?
They don't have any free cash flow and their burn rate is still high.