Technical Tuesday revisits Tesla
Chicken Little had a problem. After being struck in the head by an acorn, the star of the story incorrectly deduced that the sky was falling. Calamity ensured, and the chicken was outcast from society, to live out it's days in shame and squalor. So too has it been for investors who have been short Tesla, as Elon Musk's net worth has now exceeded that of the entire market cap of ExxonMobil and the company itself is worth over $1 trillion dollars. I get that money is made in flow, not valuation, but this is Nucking Futs. Truly. Let's look at their financials from their Q3 report.
Market Cap: $1.05 trillion
Total cars sold in 2021: 627,572
9 month revenue: $36.12 billion (annualized to $48 billion, $57,607 per car)
9 month income: $3.2 billion (annualized to $5 billion, $5,103 per car)
9 months cash flow from operations: $6.9 billion
9 months regulatory credits from the sale of CO2 credits to other car makers: $1.15 billion
Net Assets at September 30: $17.3 billion
Just for fun, let's look at Toyota, a company that sells more than 11 mm cars globally each year.
Toyota trades at 1x revenue. Tesla trades at 20x revenue.
Toyota makes $37 billion in income, which means it trades at 7.8x earnings. Tesla trades at 200x earnings.
All else being equal, Tesla will have to sell 25.5 mm cars a year, an increase of 40x per year, roughly 2.5x the number of cars Toyota sells each year, and 2.5x the number of cars sold in the United States.
So while investors may get excited about Tesla selling 100,000 cars to Hertz over the next 14 months, it's a pretty massive gap to 25.5 mm per year. Investors may get excited about the government mandating consumers buy EVs and transitioning the 108 mm passenger cars in the US and 289 mm vehicles, assuming GM, VW, Mercedes, Toyota and Honda don't get a huge share of that. Investors may even get excited at the trillions of dollars that will need to be spent to upgrade the grid to position it to replace the 14 mmbo/d of oil used here each day to power transportation.
But me? Tesla's valuation is bizarro land and when it crashes.... the market will come down with it.
Chicken Little, out
#hottakeoftheday