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Tesla's dilemna!

 Yesterday Musk indicated that there was no good reason for Tesla's share to trade at their current valuation.  In fact, Tesla's share price is so out of the realm of the realist that it's almost certain that there will eventually be a backlash.  Tels is trading at US$ 567 today, dow from a higher of US$ 607 a few days ago (November 27) why is Tesla so expensive....because investors have decided that momentum trading is the thing, that once the shorts were covered (when the price rose from $100 to $300) there was pent-up demand for this most shorted stock ever.

Short sellers still believe their theories, they just cannot afford to hold their positions!  

The fact of the matter is that Tesla introduced something amazing, that will revolutionize the car industry.  I still expect a lot of great things out of Tesla, I still think its a very interesting company, but nothing in what they do can justify the company's current P/E of 1,124x which is simply idiotic.  But like the housing bubble of 2008 where everyone could see that things were insane, there is simply too much stupid money out there!.  Its not only Tesla, think Hertz that was bankrupt and about to do a public offering -- eventually, the SEC forced Hertz and its advisors to withdraw the issuance.

Telsa's problem now is that it's losing its first-mover advantage, look at BMW i3 that is even more popular there than the Tesla 3 or Y.   Demand for the S and X (which were always a niche market with about 2 million cars sold annually worldwide).  The power wall is nice packaging, that others are replicating, battery technology that Tesla uses has been invented by others --sure they have improved the process and reduced costs in manufacturing, Tesla's system integration is years ahead of its competitors, but they are fighting back.  Telsa has made bold promises on battery costs, energy density durability Level 5 self-driving (fully autonomous), and yet all these promises are still months/years from being achieved.  In 2019 Musk announced that there would be 1,000,000 autonomous cars in the US by the end of 2020.  We are still 28 days from the end of the year, still, the number of fully autonomous cars is int he hundreds not the thousands or the million as promised

GM, Ford Mazda, Toyota all have P/Es in the range of 22/28 not 1,1124.  The truth of the mater is that Tesla's share price should be around US$ 30, and not US$ 600.  






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