The share prices of other carmakers should be declining at the same time to explain Tesla‘s value, but they are not.
It is just about practicable to make use of the remarkable valuation of Tesla.
Ignore the fanboys of Elon Musk, who cheer on the electric-car industry at all expense. Make some rosy predictions about Tesla Inc. gaining a huge part of the world’s sales of cars, making more profit on each sale than current car producers, and introducing battery-backed solar installations to a pleasant business.
Dismiss all the obstacles, and it could be justified, at a pinch, to see a share price of 211 times the low expectations for this year’s earnings.
Yet there’s already an issue with the stock market. The rest of the industry won’t be if Tesla is a hit. They choose not to buy a Ford or a BMW while someone purchases a Tesla. And this most simple logic is overlooked by shareholders, pricing in performance for both Tesla and the rest of the industry.
In the past year, the overall market share of all other big U.S., European, Japanese, and Korean car producers rose, even though the value of Tesla rose eightfold to equal them. Shares in Chinese and Indian car manufacturers, perhaps less affected by Tesla, have also increased, while alongside Tesla, Chinese electric-car manufacturers also soared.
It’s not that Tesla is not projected to steal a significant share of the market from conventional electric utilities. Also, their stocks were good, if less interesting than car producers aside from this, they only produced a fifth of their coal fuel, so on average the U.S. The 20 percent coal-powered Tesla paid from the grid.
In the past year, private funds armed with government stimulus checks have been pouring into the capital market. Most buy what’s going up, although the old-fashioned discounted cash-flow research of investor chat rooms is not a big part of the conversation. Tesla is an enticing brand and Mr. Musk has made more efforts to target individual investors than most CEOs.
Other stocks with a strong growth tale to share have also exploded, jumping in valuation with everything related to zero-emission vehicles. Yet others have still come a long way down again as a reminder of the risks here, as with the would-be hydrogen-truck manufacturer Nikola Corp. and battery creator QuantumScape Corp. In less than two months, QuantumScape soared 1,000 percent, before dropping more than half in 10 days.
Tesla has a fascinating story, as policymakers around the globe are promoting green vehicles and solar power as major components of the response to climate change. The addressable market and opportunity for this category are more important to the study than the quarterly cash flow data.
These investors are able to have their sights squarely set on the far future as long as Tesla doesn’t go bust, as it nearly did. The whole automotive industry is the addressable market; if Mr. Musk could manufacture self-driving vehicles, the addressable market would broaden to include the taxi industry as well, even personal transport. Add solar and home solar panels, and there is plenty of room to expand.