VLKAF - Tesla: Is Valuation A Blind Spot For Investors?

2024-07-08 16:05:09 ET

Summary

• We have concerns regarding the sustainability of the company's valuation due to the capital intensity of Tesla's business model, increasing competition in the market for EVs, and regulatory risks.
• Delays and uncertainty surrounding new products and technologies, like robotaxis, further complicate Tesla's growth outlook.
• Despite Tesla's historical success, we think the market may be overestimating the company's future growth potential, leading to our Sell rating on the stock.

This write-up is not meant to discount the huge amount of success Tesla, Inc. ( TSLA ) has seen with CEO Elon Musk at the helm over the last 20 or so years.

Tesla’s growth has been astronomical. In the last 10 years alone, the company has increased revenues by more than 29x (a 41% CAGR) and EBITDA by almost 300x (77% CAGR)! And shareholders have been rewarded – over the same period TSLA stock has appreciated by more than +1,500%, while the S&P 500 (SP500) returned just over +230%.

It’s difficult to argue with this level of success. And that’s not what we’re trying to do here....

For further details see: