Thursday, August 22, 2019 8:43:00 AM
Tesla Stock Needs to Start Trading Like a Car Stock
Tesla (NASDAQ:TSLA) is finally a real car company. And Tesla stock will be in trouble until it starts trading like it.
Tesla delivered 95,356 cars during the second quarter and expects to deliver 400,000 for the year. Right now, TSLA has 15% of the U.S. luxury car market. Once its Shanghai factory ramps up, production will rise another 150,000 per year.
When all this was a glint in Elon Musk’s eye, five years ago, Tesla shares sold for $259 each. They open August 21 at $225.
Tesla stock is finally being valued as a real car company. Even profitable car companies like General Motors (NYSE:GM), are worth just a small percentage of their sales. Tesla is still valued at twice its 2018 revenue.
The result has been a great year for Tesla stock shorts. At the end of July almost 40 million Tesla shares were being borrowed and sold short. Tesla has 172 million shares outstanding.
Tesla’s Solar Fail
For investors, Tesla is strictly a car company. Total revenue from its batteries and solar panels represent just 7% of revenue. The batteries are doing great, especially as back-up power for commercial utilities. The solar panels are doing horribly.
Tesla paid $2.6 billion to get into this business in 2016, buying SolarCity — from his cousins. At the time, SolarCity was the U.S. leader in residential solar. Now it’s fourth, behind Sunrun (NASDAQ:RUN), Vivint Solar (NASDAQ:VLSR) and SunPower (NASDAQ:SPWR).
Tesla is trying to juice up its market share with a rental program, starting at $50 per month for a 3.8 Mw system. The program is being offered in six states. It may do well in Connecticut, where electricity costs $23.35 per megawatt hour. It may do poorly in New Mexico where the cost is $12.21 per megawatt hour.
There are also “gotchas” that make this look more like an old-fashioned solar lease than a true rental, like a $1,500 charge to remove the panels. The quality may also be suspicious. Walmart (NYSE:WMT) is suing Tesla because panels on 7 of its stores caught fire. It wants Tesla to remove panels from 240 stores and pay damages.
Tesla stock’s Remaining Bulls
There remain Tesla bulls, like investor Ron Baron. He says 90 million cars are sold each year, meaning there’s still a huge addressable market. He says Tesla’s production costs are declining, and other carmakers are still slow-walking the move to electrics.
In markets that love Tesla, people really love Tesla. The Tesla Model 3 now has 46% of the near-luxury car market in California. In Norway Tesla has 70% of the electric market and diesel vehicle sales are down 95%. Tesla’s “secret master plan” from 2009 is working. Money from the high-end Tesla Roadster has gone into mass production of less-expensive models with a larger market. A pick-up truck and semi-trailer are on the way. People can, in theory, power their homes with Tesla solar cells and batteries.
But Tesla is still bleeding cash. Even after cutting its research and capital spending to industry norms, it lost $167 million on operations in the second quarter, a net loss under GAAP of $2.31 per share. It needs to increase that research budget to bring out promised new models, and it needs to increase capital spending to scale production.
The Bottom Line for Tesla
Tesla is changing the world but, like those solar companies mentioned earlier, it’s not making a ton of money while doing it.
Tesla may turn a small profit later this year because it has cut spending and is ramping up production. But it will be a small profit. To justify its $40.4 billion market cap, it must at some point make a large profit.
It’s nowhere near that, which is why the bears and shorts are having their day with it. At this point, Tesla stock would be better off trading like a car stock.
https://www.yahoo.com/finance/news/tesla-stock-needs-start-trading-151813279.html
GO TESLA, INC
"PEACE"
$$$$$$ $$$$$$
AMADEINAMERICAENERGYTECHNOLOGYANDCARCOMPANY
Recent TSLA News
- U.S. Stocks Finish Lackluster Session Little Changed • IH Market News • 04/24/2024 08:33:00 PM
- Block Innovates Bitcoin Mining, DOJ Proposes 3-Year Prison for Changpeng Zhao, and More Crypto News • IH Market News • 04/24/2024 05:50:55 PM
- Upbeat Earnings News May Lead To Extended Rebound On Wall Street • IH Market News • 04/24/2024 01:09:05 PM
- U.S. Futures Display Mixed Results Amid Earnings, WTI and Brent Crude Prices Dip in June Futures Trading • IH Market News • 04/24/2024 11:31:20 AM
- Tesla Surges 12% with 2025 Affordable Vehicle Promise, Evotec Slumps 36% on Uncertain Outlook, and Latest Earnings • IH Market News • 04/24/2024 11:29:58 AM
- Coca-Cola and Microsoft Sign Billion-Dollar Agreement, Apple Event Set for May 7, and More News • IH Market News • 04/24/2024 11:28:02 AM
- Stocks Close On Firm Note For 2nd Straight Day On Earnings Hopes • IH Market News • 04/23/2024 09:00:38 PM
- Tesla Releases First Quarter 2024 Financial Results • Business Wire • 04/23/2024 08:09:00 PM
- Futures Pointing To Extended Rebound On Wall Street • IH Market News • 04/23/2024 01:11:27 PM
- U.S. Index Futures Rise in Pre-Market, Oil Prices Dip Slightly • IH Market News • 04/23/2024 11:26:41 AM
- Apple Loses Market Share in China, GM Surges in Pre-Market Following Upward Revisions for 2024 Projections, and More News • IH Market News • 04/23/2024 11:25:34 AM
- U.S. Stocks Close On Bright Note Despite Coming Off Day’s Highs • IH Market News • 04/22/2024 08:38:04 PM
- Despite Record EV Production Numbers, Shortage of Battery Metals Looms • PR Newswire (US) • 04/22/2024 03:24:00 PM
- Despite Record EV Production Numbers, Shortage of Battery Metals Looms • PR Newswire (US) • 04/22/2024 03:23:00 PM
- Despite Record EV Production Numbers, Shortage of Battery Metals Looms • PR Newswire (Canada) • 04/22/2024 03:23:00 PM
- Li Auto Stock Drops 7.3% Amid Tesla Price Cuts, Salesforce Retreats from Informatica Deal, and Other Market Updates • IH Market News • 04/22/2024 12:09:21 PM
- Nasdaq, S&P 500 Extend Losing Streaks On Tech Weakness But Dow Advances • IH Market News • 04/19/2024 08:32:14 PM
- Paramount’s Shares Surge Following Sony and Apollo’s Joint Bid; ISS Backs Berkshire Hathaway Director Re-election, and More • IH Market News • 04/19/2024 11:31:22 AM
- Apple to Invest $250 Million in Singapore Expansion, Oracle Commits $8 Billion to Japan Infrastructure, and More News • IH Market News • 04/18/2024 11:11:52 AM
- United Shares Surge 5.3% in Q1 2024 Earnings Beat; Take-Two Cuts 5% of Workforce, and More News • IH Market News • 04/17/2024 10:57:39 AM
- Ericsson Soars with 66% Net Profit Growth; Live Nation Under Antitrust Scrutiny in US, and More News • IH Market News • 04/16/2024 11:18:19 AM
- Tesla Cuts 10% of Workforce, VP Resigns as Shares Fall 4% • IH Market News • 04/15/2024 06:42:49 PM
- Samsung Surpasses Apple in Q1 Smartphone Market; Salesforce in Talks to Acquire Informatica, and More News • IH Market News • 04/15/2024 11:06:48 AM
- Delta Generates US$37 Million Profit in Q1, Google and Intel Unveil Cutting-Edge AI Chips, and More News • IH Market News • 04/10/2024 11:13:48 AM
- Tesla Resolves Autopilot Lawsuit, JPMorgan Unveils Potential CEO Successors, and More • IH Market News • 04/09/2024 10:39:30 AM
Axis Technologies Group and Carbonis Forge Ahead with New Digital Carbon Credit Technology • AXTG • Apr 24, 2024 3:00 AM
North Bay Resources Announces Successful Equipment Test at Bishop Gold Mill, Inyo County, California • NBRI • Apr 23, 2024 9:41 AM
Epazz, Inc.: CryObo, Inc. solar Bitcoin operations will issue tokens • EPAZ • Apr 23, 2024 9:20 AM
Avant Technologies Launches Advanced AI Supercomputing Network and Expansive Data Solutions • AVAI • Apr 23, 2024 8:00 AM
BestGrowthStocks.com Issues Comprehensive Analysis of Triller Merger with AGBA Group Holding Limited • AGBA • Apr 22, 2024 1:00 PM
Cannabix Technologies to Present Marijuana Breathalyzer Technology at International Association for Chemical Testing (IACT) Conference in California • BLO • Apr 22, 2024 8:49 AM