Dear Reader,
Tesla posted a 16 million USD profit in the first quarter 2020 on 5.985 billion USD in revenue.
16 million USD is a tiny amount on 5.985 billion USD in revenue. However, Tesla does not make a profit on an yearly basis and is not profitable on four rolling quarters. The great thing about Tesla's earnings report is that Q1 2020 revenue of 5.985 billion USD is up 31.80% on a Q1 2019 revenue of 4.541. For a company that is making billions of revenue a quarter, that is a staggering growth of revenue. That is why today in before market hours trading Tesla was up a lot. Tesla's current market capitalization amounts to 148.39 billion USD at 806 USD
I estimate Tesla's current intrinsic value to be around 50 billion USD which implies a stock market price of 272 USD. The main reason for my comparatively low estimation of Tesla is that it is not profitable. Tesla is growing its revenue very fast, but the company still makes almost no money. What is more, other automobile manufacturers like Ford, GM, Volkswagen, Toyota are trading at much lower Price/Sales ratios.
Tesla will survive if it becomes really profitable. I know Amazon has so far pulled the trick of making almost no money and prospering. However, through cloud services Amazon has already figured a way to make money which slashed its Price/Earnings ratio by half. Today's market will not forgive losses for long.
Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook 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 on the blog are Petar Posledovich's. 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
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