Why Tesla's Valuation is So High

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Tesla stock can be overvalued or undervalued. It just depends on what benchmark you want to use. Since Tesla has more growth than value, we compared the company's simple valuation ratio (7) to the top ten largest companies in the world (average is 8). That doesn't prove Tesla stock is undervalued because we need to compare apples to apples which is what Tesla does today compared to other companies in the same business. Right now Tesla is an automaker with quite good gross margins compared to the competition. Those of you who love price targets will be interested to know that Tesla would trade under $20 a share were it valued the same as competitors like Ford or General Motors. Those latter two names represent companies with a massive amount of debt that had problems navigating the 2008 financial crisis. Tesla is in much better shape with a strong net cash position and little debt. The reason investors are overvaluing Tesla stock is because they see a company that may be able to use generative AI to solve the autonomous driving problem - it's ARK Invest's robotaxi thesis that sees Tesla shares hitting $2,000 by 2027. Love Elon Musk or hate him, our video on Tesla's valuation will teach you something.
RESEARCH PIECES USED IN THIS VIDEO:
1. Tesla in China | A Risky Adventure
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2. Looking For The Next Tesla? It's Pointless
• Looking For The Next T...
3. Is Tesla Going Bankrupt? | A Tesla Bankruptcy Analysis
• Is Tesla Going Bankrup...
4. Here’s Why Short Sellers Are Shorting Tesla
www.nanalyze.com/2020/07/why-...
CHAPTERS:
Intro
Saint Elon Musk or Satan?
How can we value a stock?
Tesla's simple valuation ratio
Tesla vs Ford vs General Motors
Tesla' cash flows and margins
ARK Invest's $2,000 Tesla stock prediction
A slick Tesla valuation model
Tesla's historical valuations
Conclusion
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DISCLAIMER: Our content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, along with independently researching and verifying, any information contained within our KZbin videos or on our website, whether for the purpose of making an investment or otherwise.
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$TSLA

[@Nanalyze]

Elon told us that he wants you to subscribe to Nanalyze. He said it would help the Cybertruck come out sooner if you subscribed to us. May as well try it: kzbin.info 🙏❤

[@bingebinge3722]

Compared to TSLA, I think this channel is hugely undervalued. Thanks for the vids!

[@Nanalyze]

We really appreciate that! Thank you for the kind words.

[@user-ee2zo7df4o]

Praise be to Elon.

[@Nanalyze]

Amen

[@bobvance-]

cringe as fuck@@Nanalyze

[@Jop_Kop]

Thanks Nanalyze - again a pragmatic way of looking at the subject. I have learned a lot already from your channel.

[@Nanalyze]

We love to hear that! Thanks for the kind words and we're happy that you've learned something. That's our goal: help people become better investors.

[@ericweis9771]

Very informative Thank you

[@Nanalyze]

Glad to hear Eric!

[@unktzor]

Thanks for the great content man!

[@Nanalyze]

Thank you for the kind words!

[@ramcd2005]

Joe, should the years on x-axis of the Tesla Ford and GM operating cash flows be going from left to right?

[@Nanalyze]

Great catch. So the years are going in the wrong direction AND they're wrong. The data points furthest to the right would be 2022. Thank you for pointing that out!

[@jtjr26]

I just wonder how long Tesla is going to get the boost in valuation like a tech startup as opposed to the actual car company they actually are. They promise autonomous cars, household batteries and giga factories but right now they have only ever delivered on making cars and they are not entirely reliable at that.

[@Nanalyze]

They're pretty damn good at making cars. Given Musk's track record we wouldn't be surprised if he delivers on autonomy. As for batteries and giga factories, those are a reality today.

[@adamhanninen8295]

Thanks again Joe you’re the man!

[@Nanalyze]

Thank YOU!

[@eddiegill]

I think their decentralized utility system will be a big contributor to profits with high margins . All a homeowner needs to participate is a Tesla power pack battery. If you have solar the home owner can earn even more. It manages electricity output helping meet energy needs when greatest . All possible with Tesla battery and Autobidder platform creating a virtual power plant

[@Nanalyze]

An exciting bull case. We'll see how it plays out. Solar adoption would certainly be a key driver.

[@sa34w]

You seriously deserve more views

[@Nanalyze]

Thank you! With all the support we get, we'll make it soon.

[@gerritjanboeve]

Current valuation is not logical. It's mostly based on hope and dreams at this point. I'd say anything between $75 and $100 would be fair.

[@Nanalyze]

There's a lot that goes into valuing a stock and everyone's approach is different. Are you using any financial information to come to that conclusion? It's also important to set a valuation target, not a price target, so it's more dynamic. Tesla is a unique company with a lot of future growth priced in. But they could also surprise us with advances in robotics, data, and autonomous driving. There's a lot to consider and it doesn't do any good to spout out a price target.

[@sublyme2157]

I can never figure out how to properly value Tesla. On one hand it has all the makings of a meme stock; on the other hand it's run by a brilliant fanatic.

[@Nanalyze]

That sounds about right!

[@bobvance-]

Elon is an liar and a moron. At least he acts like a moron. He lost $Billions$ overnight with Twitter. You have to be completely out of touch to think Elon is brilliant. Just look up the hundreds of lies Elon has told. Everything from his failed businesses to the videos that Tesla release showcasing their technology that DOESN'T do anything they claim it does. Like how Tesla has been banned from using "autopilot" in advertising because it's false advertising lmfao.

[@gerritjanboeve]

Brilliant fanatic or Toxic psychopath? A fine line.

[@Nanalyze]

@@gerritjanboeve True that. The man is a legend though, make no mistake.

[@Martinit0]

Aswath Damodaran has a good YT video and blog post on that. Last time he valued TSLA was November 2023. He even provides his Excel sheet so you can change the valuation assumptions to come to your own valuation.

[@scottlink183]

Convergence.

[@Nanalyze]

Seems about right

[@Sicksociety334]

For what it’s worth….. if you’re buying Tesla you’re buying an Auto stock. They promise and promise other things but the only thing they make a profit on is auto manufacturing. Cut and dry I do not invest in promises, I invest in results. As an auto manufacturer they may well be successful however their stock is enormously inflated and I am not taking the hook.

[@Nanalyze]

Correct. We don't invest in promises either. That said, what they've accomplished thus far is very impressive and it wouldn't be a compete shocker if they end up dominating autonomy.

[@Sicksociety334]

Given the failures of many of the other ventures it is possible to flip the coin and say it’s incredibly lucky that the automobile portion of his ventures worked. Space x is not profitable yet and neither are the solar roof tiles, the boring company, the air hockey train, x, and the semi truck venture. They have all spectacularly failed and if any one of them where a stand alone company on a video of yours, you would not poke it with a stick. I absolutely love you guys and will getting around to buying a plan, you have brought me from the brink of meme idiocy. We just differ on this point. But that’s ok.

[@Nanalyze]

@@Sicksociety334 What Tesla accomplished isn't luck, it's competent execution. SpaceX is dominating launch, so let's go ahead and call that a success since profits will come later as typical with all growth businesses we invest in. Starlink stands to dominate as a global ISP. All his other ventures may come to fruition, we just don't know yet. To say they have "all spectacularly failed" seems like a stretch. ;) We would gladly poke whatever Musk has with a stick because a) it's incredibly interesting and b) it generate the hell out of clicks :) We couldn't be happier to hear you love what we're doing and half the fun here is being able to debate things and agree/disagree in a civilized manner. We wouldn't bet against Musk but we don't invest in stories. We have no dog in the race, just observing :) Thank you for your kind words and the offer of support! It's what makes this all possible. And don't worry. We don't talk about Musk too often around here because everyone else does that already. Joe P.

[@tofukid204]

Aren’t competitions eating up their margins as well? I don’t understand how the company can be so richly valued at this stage when there are so many choices out there

[@Nanalyze]

Competitors haven't been able to achieve the relatively strong gross margins that Tesla has. Many still have negative gross margins, Lucid and Rivian for example. There's a reason the leader in a niche often commands a premium by the market. Good questions! -Wyatt C.

[@tofukid204]

@@Nanalyze their margins are declining yoy tho

[@svenhodaka9145]

Tesla has built the “machine that builds the machine”. They have also been building EVs for >10 years. You need a telescope to see second place in the EV business. Oh, BTW, EVs aren’t the only thing they make.

[@Nanalyze]

BYD is catching up - exceeding Tesla if you count hybrids.

[@svenhodaka9145]

@@Nanalyze C’mon, hybrids! That’s like going to the beach and wearing a life jacket the whole day! 😂 Personally, I feel that hybrids are a compromise for most people and lose too much of EV the benefit.

[@JustStartingOut-nt8ve]

By 2030, I think JOBY's flying robotaxi will be far more exciting than TSLA's on ground transportation robotaxi.

[@Nanalyze]

The first key milestone Joby needs to hit is having a single vehicle flying passenger routes profitability.

[@JustStartingOut-nt8ve]

@@Nanalyze very true, but I think we would probably have to pay 10x~20x more by then and people would be talking about 10x~20x from that point or 100x~400x from today's price. So, it seems worth the risk to invest a little amount now as long as they are hitting near term milestones.

[@Nanalyze]

@@JustStartingOut-nt8ve No FOMO stuff please. We don't invest in pre-revenue companies. Ever. That simple rule will help you avoid all the land mines out there. Until there is meaningful revenue, zero interest.

[@Nanalyze]

Our latest piece on Joby: kzbin.info/www/bejne/qJS7dZpppJaVeqc

[@JustStartingOut-nt8ve]

@@Nanalyze OK Thank you. So, I think we should also wait until TSLA starts to generate revenue from robotaxi because the current revenue without the FOMO of robotaxi does not justify the valuation. In other words, the current valuation is supported by FOMO of robotaxi.

[@aloufin]

Lamentations 3:22-23 - The steadfast love of the Lord Elon never ceases; his mercies never come to an end; they are new every morning; great is Eour faithfulness.

[@Nanalyze]

Amen