Tesla versus Daimler might become an epic battle of electric vehicle companies.
Daimler - an electric vehicle company? Well, they are going to launch 10 electric vehicles in the next five years. Tesla has a lineup of three cars right now. But, this game is not about the car lineup or the amount of pre-registrations.
The main difference between Tesla and Daimler is that right now, they are in different business models: while Daimler is in the business of making money with cars, Tesla is is in the business of making cars with money.
Let's take a look at some numbers: as of October 31st 2017,
- DAI has a valuation of 77 billion Euros while TSLA has a valuation of $53 billion.
- DAI has a yearly revenue of EUR 161 billion while TSLA has $10 billion.
- DAI has about EUR 9.5 billion net profit while TSLA has -0.7 billion net loss.
- Both companies are facing legal battles.
- DAI stock advanced 98% in the last 5 years while TSLA advanced 1040% in the same time.
- DAI is as sexy as a distinguished gentleman in his 50's while TSLA is as sexy as Mick Jagger... when he was a 20-year old.
Bottom line: Damiler makes 16 times more money than TSLA per year, has a price/earings ratio of 8 while Tesla's is deep in the red, has 10 electric vehilces in the pipeline versus maybe four by Tesla, and has more than 100 years of knowledge versus maybe 10 for TSLA.
Looking at the facts, we must conclude that in the timeframe of up to 5 years, stock price has absolutely nothing to do with financials, or production, or anything else a homo oeconomicus could think of. But it has everything to do with supply and demand in the specific stock, and that in turn has everything to do with liquidity and psychology. As long as there is enough money and positive psychology, there is no limit to what heights a stock price can go. So, yes, TSLA could go to 1000 and beyond - as long as both psychology and liquidity remain positive and the company has enough liquidity to cover its running costs.
Many traders are right now concerned about the production issues at Tesla's various production sites. That is not the point - Tesla will at some point iron out their problems, whether it's now or in 2019. The difficulty for Elon Musk lies in keeping a positive psychology in the stock, keeping the total supply for stock reasonable, and keeping the company from going bust. These three little tricks keep Tesla stock flying.
How long can the party go on? Maybe another five years, maybe another 5 hours - nobody knows. The only sure thing is that at some point in the future, the valuation of Daimler and tesla will start to converge. And then, some people will make money, and some will lose money. Place your bets... but do be careful.
Disclosure: I am/we are short TSLA.
Additional disclosure: Short via stocks. This article is for informational purposes only and does not institute a recommendation to engage in any buying or selling securities. See your personal investment advisor for advice BEFORE entering positions.