In 2020, Tesla (NASDAQ: TSLA) The share price is up over 700%. However, this year, after continuing the upward movement in January, stocks have dropped more than 3% YTD (YTD).
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The company outperformed EPS and vehicle shipments estimates in the first quarter of 2021 by $ 0.07 and $ 100,000, respectively, indicating that there is still demand for its products. Are investors nervous about Tesla’s high revaluation or the number of competitors popping up in the electric vehicle (EV) space? Anyway, the promotions are discounted, so now is the time to take a look?
The case of the bull for Tesla
Tesla is considered the first company in the electric vehicle sector to start from scratch as a mass manufacturer of relatively affordable cars; the prices of which will fall as battery technology develops and become less expensive. Another help in this endeavor is the opening of a new battery factory in Texas later this year by Tesla. The company’s growth cannot be ignored, and its record deliveries of half a million vehicles are expected to be surpassed by more than 50% this year in 2020. In addition, Tesla believes that shipments will grow more than 50% per year over the next few years. The last quarter also marked another record for the company as it posted over $ 1 billion in non-GAAP net income.
Autonomous vehicles (AV) are the future of the electric sector (projected market penetration of 12% by 2030) and no other electric vehicle competitor has the same amount of data that Tesla has collected for this technology over the years from its vehicles. The AV equipment market is expected to be worth nearly half a trillion dollars by 2030, and given Tesla’s clear competitive advantage and 18% share of the global electric vehicle market, I believe the company will get a good chunk of that amount. It also helps the company well in its insurance efforts, which analysts predict will bring the company a quarter trillion dollars in revenue by 2030. In terms of its core business, Tesla will build another plant in addition to its new factory in Texas. in Germany this year as well.
Tesla Bear Case
Yes, Tesla’s share price is relatively “down”, but it’s still ridiculously expensive. The company has a market capitalization of nearly $ 700 billion, higher than the seven largest automakers combined. Tesla’s share price is trading at a forward P / E of 170x, while the S&P 500 is only 22x. In addition, actuaries determined that Tesla had only a 45% chance of making its projections of future earnings, further exacerbating its overestimation.
Competition comes not only from new entrants in space such as NIO but also from old car manufacturers. In fact, for the first 9 months of 2020 Volkswagen, Renault-Nissan-Mitsubishi, as well as Hyundai-Kia all have sold more EVs in Europe than Tesla. Volkswagen to launch 70 new electric vehicle models by 2030 and General Motors It is expected that there will be 30 models on the market by 2025. These companies have the financial strength and customer base to pose a real threat to the growing automaker. And finally, there is Elon Musk, Tesla’s Technocking, who has been known to exaggerate one or two statements in the past, and who may one day finally lose investor confidence.
So, should I be watching Tesla stock right now?
Yes. Tesla makes smart cars with the latest features and auto-update technology. The company is building new factories, cutting battery costs and supplying vehicles to meet growing demand. With its foray into antivirus and insurance that is predicted to generate huge revenue growth for the company, it could be a safe investment.
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