Shorting Tesla: Bridging The Lofty Valuation To Economics

Sep. 27, 2022 11:37 AM ETTesla, Inc. (TSLA)72 Comments


  • Despite Tesla's recent declines, it continues to outperform by sustaining gains of more than 20% QTD while the broader market approaches mid-June lows.
  • Yet, rising interest rates and persistent inflationary pressures threaten to erode the valuation premium attributed to the stock.
  • The following analysis will visit the composition of Tesla's valuation from an economics point of view and explain why a near-term downward adjustment is imminent.
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Tesla motors showroom with cars and illuminated logo branding at dusk London UK


Markets dropped another leg lower over past weeks after strong CPI data and another jumbo rate hike pushed prices towards the June troughs. While the Tesla (NASDAQ:TSLA) stock has not been spared and followed suit

Steady-State Firm Value Equation

Steady-State Firm Value Equation (Credit Suisse)

Gordon Growth Model

Gordon Growth Model (Credit Suisse)

Future Value Creation Formula

Future Value Creation Formula (Credit Suisse)

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Disclosure: I/we have a beneficial short position in the shares of TSLA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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