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Tesla Worth $1 Trillion

Jan. 10, 2021 4:57 PM ETTesla, Inc. (TSLA)TM, TOYOF5 Comments
Ruerd Heeg profile picture
Ruerd Heeg's Blog
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Deep Value, Foreign Companies, Nano-cap, Long Only

Seeking Alpha Analyst Since 2012

As a mathematician (Ph.D.) I use 7 quantitative strategies with statistically extremely high returns. I select these cheap companies with software comparing thousands of global stocks on value metrics, liquidity, quality metrics, and momentum. I focus on global nanocaps and net-nets. Check Turning Rough Stones: turningroughstones.substack.com

As with other bubble the price increase accelerates at the end of the bubble. This happens also with Tesla (TSLA). It is now worth about $1 trillion, also taking employee options into account. It is worth more than 4 times Toyota Motors (TM). But Toyota Motors provides much better service, delivers many more cars, is profitable and owns lots of intellectual property including solid state battery technology.

Moreover at Tesla there are what I consider serious accounting issues. For example prices go down over time but profit margins stay firm. A car is completely different from the average electronic device. Materials and technology does get cheaper over time but way slower than for example with computers, TVs, etc.

See here for another price decrease.

Other developments

Competition is coming in China, and even Chinese competition is coming in Europe. See this tweet about the BYD Han: cheaper and with better quality.

Tesla booked a big victory: the NHTSA closes its investigation into unintended sudden acceleration events. The bar to prove a defect is high and apparently they could not find it. That said such events are way more often reported with Teslas than with other cars. I do not think this will be the last development for this issue. See here for information on a recent event.

Bottom line

My main point for this article is that bubbles accelerate into the end. That seems to happen with the share price of Tesla. Be warned, the bubble might pop soon. My opinion is still: strong sell.

Global Deep Value Stocks is a long only newsletter. I do not publish research on stocks like Tesla in Global Deep Value Stocks. See here and here for examples of what I do at Global Deep Value Stocks. For more information you can take a free trial here or send me a DM.

Analyst's Disclosure: I am/we are short TSLA.

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