Since the start of December Tesla (NASDAQ:TSLA) stock is down 15%. The first manufacturer to hit $1 trillion in market capitalization, TSLA stock closed Dec. 15 at $976 a share.
Meanwhile CEO Elon Musk, sitting on that now-$980 billion market cap, has been crowned as Time magazine’s Person of the Year and is acting like a petulant child. He talks openly of , rejects giving rivals the Tesla got. He even got into a spat with liberal Sen.
Musk is the world’s richest man, worth as trading opens this morning. But he’s no longer all-in on Tesla. His SpaceX rocket company is now worth .
Investors need to contemplate a Tesla future without Musk.
Do the Numbers on TSLA Stock
Analysts expect Tesla to earn $6.06 a share this year, on revenue of $51.15 billion. That’s due to grow to $8.20 per share and revenue of $71 billion next year. That would be but it’s still of General Motors’ (NYSE:GM) expected revenue this year. GM is worth $84 billion.
Tesla’s valuation is unmoored from results because it’s considered a tech company, more like Microsoft (NASDAQ:MSFT) than Ford Motor (NYSE:F). Tesla captures the full life-cycle value of its vehicles, selling direct, handling maintenance, even selling insurance. Don’t think of a Tesla Model 3 as just a $50,000 purchase, bulls say. Think of it in terms of multiples of that price, earned over many years.
Tesla has also scaled production, unlike most other EV makers. Tesla will make 73% more than last year. Bullish analysts estimate it will make
Peak Tesla?
The arguments against Tesla stock remain the same as always: Tesla can’t keep it up, other car makers can make cars, yada yada yada. Analysts enjoy like of
GLJ Research. But the stock is
(For those interested in a trading take on TSLA stock, read my InvestorPlace colleague Chris Tyler’s piece published this morning.)
There are many theories for this. One is that stock. Another is that being named Person of the Year represents .
Then there are product problems. A French taxi firm stopped using its Tesla sedans after one of its cars was U.S. regulators are Tesla’s reliance on electronics can cause when the company’s servers crash.
But the best argument against Tesla is the same as the best argument for it. He joined it in 2004 in the company, taking over only
Shareholders got a hint of a post-Musk future during the which Musk didn’t attend. While the group led by CFO Zachary Kirkhorn repeated claims of growing production 50% per year. they remained diplomatic, even about into Tesla’s autopilot software.
The Bottom Line
If Elon Musk were to leave Tesla, the stock would have to take a short-term hit.
But what would the company be worth in the long term?
At its present rate of growth, it will still be 2025 before Tesla overtakes General Motors in sales. By that time GM will have Volkswagen (OTCMKTS:VWAGY) says it will be out-producing Tesla in electrics We haven’t even mentioned China.
How dominant can Tesla be when electric vehicles are commonplace, when they’re no longer pre-ordered, when they’re not bought but sold? When Tesla is “just another” car company, will it still be worth its current sales multiple?
If you don’t think it will, don’t buy the stock.
On the date of publication, Dana Blankenhorn held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
has been a financial and technology journalist since 1978. Just in time for the holidays he has at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at . He writes a Substack newsletter, , which covers technology, markets, and politics.
