Let's talk about $TLSA
I think that Tesla crafted a great set of electric vehicles, covering all the different segments and even pushing into the trucks business. I overall like their design (except for the Cybertruck) and I see the good amount of innovation and fresh air that they brought to the automotive industry (ex. pushing the autopilot technology, being fully electric and despite that having a good range and great performance). I go even further saying that their prices are actually lower than many other rivals' models at constant performance.
Nevertheless I think that the equity at today's price (~1500$/share mid-July 2020) is a terrible investment. It's clearly a bubble, some big investors and edge fund managers call it even a fraud.
The current valuation discounts too much optimism, like if everyone was to buy a Tesla car/truck/pickup in the next couple of years and all the other automotive manufacturers went bankrupt. In the last 10 FY, it never showed a profit, instead it just widened the losses: from EPS of ~ -3$ in 2010, to EPS of ~ -4.8 in 2019. Despite that, the valuation has more than tripled just in the last 4 months, from ~360$/share in 18/Mar to more than 1500$/share in 15/Jul.
Some of that huge price increase has been attributed to shorts covering their positions, another great part of that comes from the young RobinHood generation gambling on the stock. And that is exactly what Tesla is right now, a gamble, a fool's game. For sure not a long-term investment.
At 1500+$/share Tesla has a total valuation of ~280B$, which is like valuing it alone the same as Volkswagen (which includes also Audi, SEAT, SKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati), Honda, Daimler, Ferrari, BMW and Ford COMBINED. It is like valuing it the same as a diversified basket of leader and well-known automotive brands that have made the history of the transportation industry.
You can view it like this, for the same price tag you could take a piece of the same size from either Tesla, which has a revenue of 24B$ and a net income of -860M$ (yes, that's negative, it's losing money), or from a diversified basket of well-known automotive stocks like Volkswagen, Honda, Daimler, Ferrari, BMW and Ford that combined have 890B$ in revenue and a net income of 28B$. They have generated in net income alone more than what Tesla has generated in total revenue. And they are being valued as if they were at the same level, this is just crazy.
The main difference is that Tesla is a growth story, while the others are a value story. Tesla is the "first mover" in the EV sector and clearly has advantages over the others, like an assembly line fully optimized for EV and a set of tooling and technologies just for that, while the others are catching up and need some time to modernise their factories, push EV models into the market and that comes of course with a big renovation cost. But for me it is definitely not enough to attribute such a huge premium on Tesla.
I can see this: Tesla has to get everything, and I repeat EVERYTHING right and could still suffer a modest loss on the stock price, while if for any reason the growth story should fade, we are talking about huge losses that could wipe out almost the entire capital.
For updates, insights or suggestions, feel free to post a comment below!
All the information and data expressed in this essay are for informational purposes only and are not to be intended as a financial advice. They may be or prove wrong, with the real possibility of capital and money loss, use them at your own risk.