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Tesla Looks More Overvalued - Day By Day

|Includes: Tesla, Inc. (TSLA)
Summary

The stock is surprisingly resilient to mostly negative news about Model 3 production.

While the Model 3 is getting positive feedback from customers, it's production is still a mess.

Competition is still little but this will change within a very short period of time.

Jaguar, Audi, and Hyundai will be on the forefront and offer competitive cars with similar features and similar or even lower prices.

Tesla will get in trouble if they can't solve their production issues by then and grab some larger part of the market before the competition does.

I would like to begin by saying that I was and still am supporting Tesla and it's mission. In my humble opinion, Tesla started to do the right thing and pushed an entire industry where it should have been pushed towards much earlier on.

Having said that, I sold my Tesla shares a few weeks back when the problems with the Model 3 production became apparent. As per recent reports and in general a lack of information on the front, we can assume that production targets are still not being met. I don't want to talk about fundamentals, there are plenty of articles from shorts on this topic and while as a bull you may want to dispute their significance, you probably can't dispute their accuracy. There may be exceptions from time to time and especially for growth stocks you can delay the time until fundamentals become relevant, but as for any business they have to become relevant at some point to justify the companies existence.

So here we are. My once beloved Tesla on a pile of debt and production issues with the car that was supposed to spread it across the globe. Not a pretty picture.

To make the picture even worse, Tesla's competition is finally waking up. The most recent presentations of Jaguar's I Pace project, Volvo's Polestar 1, Hyundai with it's Kona project and Audi with E-Tron or Daimler with the Benz EQ are very impressive. Let me be clear: They all look great, have plenty of features (some might say "copied" from Tesla) and will be very price competitive for Tesla.

I was honestly expecting most of these cars to come by 2020 but it seems that while Musk sets ambitious targets and announces them before anyone even thinks about it, the competition preferred to stay silent and pushed hard on catching up. The result: These cars are coming this year or latest by 2019.

That's only a few months from now and I believe this will cause some serious pressure on Tesla. 

Tesla's financial situation alone is reason enough for a bear to remain a bear. But if you are a bull, you simply must consider and realize that serious competition is now just months away and Tesla's technological and market positioning advantage will be reduced with every new model that will come to the market.

In the light of these developments, Tesla is now, more than ever, clearly overvalued and we should expect a significant correction over the next 12 months. Don't be surprised if Elon Musk (who I still consider a genius by the way) re-iterates his statement on Tesla being higher valued than it truly deserves. He was right on this before and he probably still is. 

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I am not short on Tesla because I don't short - ever. My investments are only directed into growth or dividend stocks.