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Tesla at $2,000

 I am a huge fan of Tesla, but the recent price action on the stock confirms that the world has gone mad!  Tesla is trading at a multiple of 1,038x earnings...Yep, it will take 1,000 years for Tesla to earn its profits.  Now I always thought that for the manufacturing sector a p/e of 17 -- 25x was well priced and justifiable, and even you could say that Facebook and Google (in brand new sectors) would justify a P/E of 50 or even 100 times --- these were new sectors completely undiscovered and with tons of low hanging fruits.  Facebook proved again and again that theirs was a very lucrative niche.  But cars have been around for a while, it's not like Tesla has discovered the holy grail of a car that will last forever and cost nothing to run.  Sure it is better than virtually all ICE vehicles.

A few weeks ago a friend asked me if I would buy Tesla at $1,700 -- I thought no, I agree with the Motley Fool that there's some kind of craziness with the pricing of Tesla.  There is no doubt that the company is now profitable (you cannot say that with Ford) but GM is profitable and it's P/E is 28.

What is driving that insane valuation are a number of factors:

  1. Million-mile battery -- that will effectively challenge the electric grid as we know it (because a million-mile car is not a serious car, its a car for 7/10 years and a battery pack for another 10
  2. Inclusion of Tesla into the S&P500
  3. Tesla becoming a supplier of batteries to other car manufacturers
The third one is the only really interesting one (batteries as a balancer or even time shifter are already here) because Tesla's point was always wider than just making cars -- it was also shifting from ICE to batteries for the entire industry, and Tesla knows that it cannot do so alone.  Elon Musk has been vocal about electric cars having a "minimum range of 300 miles" as a game-changer for the sector.  Tesla cannot manufacture all the cars (nor does it want to), but it does want everyone having a 300-mile range...that's interesting.

Still at 2,006 .38 this morning (down 2.4%) I think that Tesla share is a sell, but who the fu$k am to have an opinion

Note:  No position in Tesla (short or long) and no position on Ford or GM

P.S.  All those lawsuits against Musk complaining that the "deal that was not" cost them money must be wondering if they should keep on bitching, when the privatization would have been done at $425.00 per share...

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