Shorting Tesla: Bridging The Lofty Valuation To Economics

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

Summary

  • 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.
  • Looking for a portfolio of ideas like this one? Members of Livy Investment Research get exclusive access to our model portfolio. Learn More »

Tesla motors showroom with cars and illuminated logo branding at dusk London UK

AdrianHancu

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)

Thank you for reading my analysis. If you are interested in interacting with me directly in chat, more research content and tools designed for growth investing, and joining a community of like-minded investors, please take a moment to review my Marketplace service Livy Investment Research. Our service's key offerings include:

  • A subscription to our daily newsletter
  • Full access to our portfolio of research coverage and complementary editing-enabled financial models
  • A compilation of growth-focused industry primers and peer comps

Feel free to check it out risk-free through the two-week free trial. I hope to see you there!

This article was written by

Let the power of quality research drive your investment convictions

Boutique investment research shop providing professional coverage on disruptive thematic equities. Our analysis provides a deep dive on growth drivers present in the secular market to identify outperforming investments.

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.

Recommended For You

Comments (72)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.