Tesla's market capitalisation is 754 billion USD currently.
In my opinion, Tesla's intrinsic value is 120 billion USD and this is the value of the electric vehicles production technology.
If one takes out government subsidies and in advance booking of advance small fraction payments of Tesla cars orders, Tesla is not profitable and with a negative profit margin in excess of - 10 %, according to my estimates.
If Tesla does not achieve a technological breakthrough, which enables Tesla Inc. to produce electric vehicles with a 5 % positive net profit margin at least, Tesla will go bankrupt.
Tesla is relying on China and the efforts of the Chinese government to reduce pollution which drives purchases of Teslas in China. However, now the tensions between China and USA are very strained and this source of revenue could well decrease or even cease off altogether if the Russia - Ukraine altercation further destroys the US - China relationships.
Actually, Tesla seems to have a founder problem. As exemplified by Elon Musk's current attempt to buy Twitter, it seems Elon Musk employs some strange business practices. Many analysts claim that all what Elon Musk is doing is trying to sell his existing Twitter stake at a higher price. This is an unproven claim, I repeat.
If Tesla's stock falls too much, it may well not be a convertible currency with which Tesla can fund its growth. To put it short, Tesla will not be able to finance itself by raising new capital or take out margin loans if its stock price falls too much. Simply because Tesla is not profitable, that is it is burning cash.
In short, both Tesla and the Nasdaq Composite are way overvalued. If the Federal Reserve, however, stops raising rates the Nasdaq Composite will recover some of its lost ground.
No comments:
Post a Comment