Tesla Inc. Valuation!

Dear Reader,

Here I am going to make an attempt to value Tesla Inc., the famous maker of Tesla electric automobiles.

Basically, I think Tesla Inc. is grossly overvalued. I my opinion, the real value is half its current market capitalization of 51.52 billion USD.

Why? Basically, Tesla Inc. is losing too much money. In the third quarter the company lost 619.38 million USD on sales of 2.98 billion USD or -0.208% net profit margin for the third quarter of 2017. For the whole 2016 things look a little better with a negative net profit margin of circa - 10%. At the same time another luxury sedan maker like BMW's net profit margin for 2016 is 7%. The car-making business is notorious for its low profit margins. Volkswagen's margins are even thinner than BMW. Than what is the problem with Tesla? The truth is electric vehicles are simply too expensive to make. They use too much ferrous metals which cost a fortune. The battery is too expensive simply. Even though the US government subsidizes Tesla Inc., the company still loses huge sums of money.

Can Tesla's  stock go to 0(zero)? Yes it can. If there is no breakthrough in the electric car manufacturing technology, investors will not be pumping money into losing enterprises forever.

So, basically I think Tesla Inc.'s stock intrinsic value is 153 USD, half the current 306.53 USD stock price. Tesla's market capitalization should be around 25 billion USD.


Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!


Kind regards,
Petar Posledovich