Teslas market cap was on par or half of the market cap of many of the largest auto companies in the world, that produce millions of cars and make significant profit. Tesla produces between 30.000 and 40.000 this year and made no actual profit this year (GAAP). As you know, this means that perfect execution and significant innovation was in order over the next 10 years to justify a 290 dollar stock price. I dont like to buy stocks were huge risks (technological innovation in batteries is still desperately needed in my opinion) is coupled with a stock price, which discounts perfect execution over 10 years. That is what I would call a lofty overvalued stock price.
Indeed, Tesla's market cap has approached half of that of Ford and GM which each sell millions of cars, GM, in fact, close to 10 million.
You do realize, porc, however, the lion's share of Ford and GM's profits come from their sale of a million or so large trucks each (one place I've seen this point made was from veteran auto analyst Adam Jonas. I don't believe he had source numbers to document this, but my recollection is that he stated his impression that 90% of profit for these company's comes from their large trucks).
The other millions of vehicles from Ford and GM are sold close to the break even point. I've not analyzed this in detail, but it would seem was a core dynamic between the pair's vulnerability to the 2008 global recession which put GM into bankruptcy, and Ford only escaped that fate by having wisely secured very large loans just ahead of the financial crisis.
Moreover, Tesla sells its vehicles at an average price vastly different than Ford/GM do, at gross margins very different than that pair,
and most importantly, Tesla's vehicle sales are growing at a pace 5 to 10X that of Ford and GM and are projected to so for many years to come.
As Elon would say, it seems you've reasoned by analogy rather than first principles. Drawing conclusions on Tesla's valuation by analogy to GM and Ford seems very unwise to me. If you'd like to take a first principles approach, it's quite public what Tesla's ambitions for vehicle sales, net margins, and prices for their vehicles will be in 2020. From there you can estimate EPS in 2020 and valuation. Decide the probability of a few scenarios based on various levels of success in Tesla's execution of its aims, and you can use a weighted average of those scenarios to determine the valuation from the model you've made. This is what I've done (and for 2025 as well, though with less precise guidance from Tesla), and I find Tesla to be anything but "enormously overvalued."
Finally, you'll want to add to your valuation a forecast of the earnings potential of Tesla's energy storage business for future sales to utilities, businesses, and residential customers.
On the other points... my forecasts do not require "perfect execution" for Tesla to justify it's valuation (actually undervalued now in my view), and Elon Musk has repeatedly said there is
no technology breakthrough required in battery costs for Tesla to deliver the Model 3 at the $35K price point. While you've expressed your opinion otherwise, you've offered no backup to it. Musk has offered the backup that Tesla can deliver 30% reductions in cost just via the economies of scale of the Gigafactory and the efficiencies of having all components built there rather than shipped from around the world to a standard battery factory.
