Call me a simpleton, but I see a much simpler story: Post M3 announcement, the market assigned Tesla a market cap of about $50-60 billion, based mostly on the intermediate-term potential of Fremont. As soon as the company started guiding lower for Q1, the SP took a dive, which continued precisely until the delivery report in Q2 reassured investors that Q1 was an aberration, and has since climbed back into the $50-60 billion market cap range. End of story.
Where does the story go next? I think three things are likely (but of course anything can happen, so not stock advice!) :
1. If...IF....Musk is right that the company will generate profits and positive cash flow every quarter going forward, the market will probably not reduce the market cap below $50 billion.
2. There are a number of potential developments in the next 12 months that would cause the market to greatly increase the market cap. The biggest one in my view is for China to really take off. FSD could also do the trick, although I believe that’s more likely in 2021. Tesla Energy generating significant profits would be a catalyst. Or it could just be excellent execution that so improves margins that profitability rises.
3. In about two years I predict the market will assign $100 billion to Tesla automotive, $50 billion to the near term potential of Tesla Network (robotaxis) and $50 billion for Tesla Energy.
So over the next 24 months the SP should rise from 300 to at least 1200. The only thing I can guarantee is that it won’t do so in a straight line.