The risk for Tesla (NASDAQ:TSLA) long investors right now could arguably be the highest it has been since the stock started trading. Tesla's valuation is absolutely insanely aggressive, the regulatory risk is at a height which I have never seen before with the company and Elon Musk has drawn and fired the last arrow from his quiver: more incredibly lofty promises.
Except this time, it doesn't seem like the market is buying it.
And that could be a large problem for the one main asset that has held up Tesla stock of late: blind faith in Elon Musk and confidence that the company will one day make money.
The timing for Tesla investors has never been more ominous. At a time where the company stock has given Tesla a valuation of almost $50 billion, the company has yet to do anything aside from miss production targets and make promises for the future.
I think Tesla could easily reprice to levels seen in late 2016, and fall to a nearly $25B market cap, which would reprice the stock near about $140.
Ford (F) has a market cap of about $43B and GM (GM) about $53B - a $25B cap for Tesla is extremely generous and a conservative price target, given that:
1. Ford and GM both consistently generate a profit.
2. Both are valued at about 8-10 P/E, standard for the sector.
3. Both have a dominant position with EVs, without any of the startup hassle that Tesla is dealing with.
A $25B market cap is still extremely high for Tesla, but makes sense to me to use as a conservative point because:
1. It's a solid technical level for the stock.
2. It still prices in speculation and an intangible that the Tesla brand could be worth
I'm really giving
