Tesla's Huge Stock Price Rise. Is it Justified?

Dear Reader,


The stock price of Tesla, Inc., the producer of electric vehicles has risen hugely in the last couple of months.

Tesla's market capitalization has recently nearly tripled in little more than two months. Is Tesla's stock market capitalization justified? No. The market capitalization of Tesla currently at 164.51 billion USD is more than 60% higher than that of Volkswagen Group, the Germany based automobile manufacturer that in the last decade has interchangeably with Toyota been ranked as the number one global automobile manufacturer in terms of unit sales. Tesla is trading at Price/Sales ratio of 6.69 which is multiples above what other leading automotive manufacturers trade at.

Tesla's stock market capitalization could be justified on only one premise: Tesla becomes a near monopolist in electric vehicle manufacturing and simultaneously electric vehicles totally replace the current internal combustion engine vehicles.

Will this happen? In my opinion, no. First, electric vehicles will not take more than 10-15% global automotive vehicle market share in the next 10 years. Second, it is highly unlikely that Tesla would remain a monopolist in electric vehicles production.

Personally, I believe Tesla is worth not more than 50 billion USD in intrinsic value in the next 10 years. And that is in case Tesla figures a way to produce electric cars profitably, which for now proves a herculean task. Or with other words, Tesla has not figured how to produce sustainably electric automotive vehicles with net profit, even with government subsidies.

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.  Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is as is.

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

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.)!

Respectfully yours,

Petar Posledovich