Dear Reader,
Tesla Inc, the electric vehicle manufacturer, is currently worth 600.47 billion USD or more than all the leading top 10 automobile manufacturers in the world.
What are the value drivers that could substantiate such a valuation?
Firstly, it seems that investors forecast that Tesla could become a quasi monopolist on the automobile market, or turn into oligopoly, at least, which will allow Tesla to raise prices, achieve much higher net profit margins that are typical for the car industry at present and thus substantiate its higher valuation.
Secondly, investors are may be thinking that Tesla will successfully break into other industries like solar energy production or battery production in which Tesla will again become the market leader.
Thirdly, investors are perhaps thinking that the hype around Tesla will create much higher demand for automobiles, that is Tesla's very existence will widen the car market.
All in all, all three assumptions could come to fruition, but with very low probability.
I estimate Tesla is worth around 120 billion USD. Tesla is a classic case of a narrative, story stock. One significant impediment to the story told is that the automobile market size is known and Tesla's current market capitalization is already excessively high.
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.
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Respectfully yours,
Petar Posledovich
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