More Reasons to Doubt Tesla

August 21st, 2020

We published an article yesterday stating our concerns about the soaring price of Tesla and how we feel its grossly overvalued. We cited a few metrics to support our case, and on the day we published the article the stock price of TSLA jumped another 7.5%. (Obviously we need to increase our readership and spread the word!) Here are a few more stats that caught our eye:

  • Tesla is now worth more than Wal Mart.

Walmart and Tesla Market Cap

  • Walmart’s financials dwarf those of Tesla
  2019 Revenue 2019 Net Income
Walmart $514bn $22bn
Tesla $24.5bn $368m
  • On May 1st, Tesla CEO Elon Musk tweeted the following when Tesla was trading at $760/share:

          “Tesla stock price is too high imo”

           Tesla’s stock price is currently trading close to $2,085 at the time of this post.

  • Tesla’s market cap has increased over 800% in the last year

         Tesla’s sales are up 3% over the same period

  • Initially, we thought the rise in Tesla was due to small investors engaging in bad behavior and chasing returns. There’s an ocean of studies and research confirming the tendency for smaller and typically less experienced investors to jump on the bandwagon late, the most recent example being Robin Hood investors piling into bankrupt Hertz stock. However, the Tesla run up appears to be due to institutional investors pouring in money. Tsk tsk – they should know better!

Volume of Tesla Purchases

The orange and blue lines show trade volume. Investors buying Tesla 10,000 shares or more at a time is rising. Investors buying in smaller lots, i.e. your average investor, is decreasing. We’re waiting on the plot chart in the next few months showing fund manager turnover against a plummeting Tesla share price. What will they do when the music stops???

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but is intended to help manage risks and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax, or financial advice. Please consult a legal, tax, or financial professional for information specific to your individual situation.

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