TSLA - Tesla: More Pain Likely Ahead

2024-07-02 10:57:18 ET

Summary

• Tesla's $631 billion market capitalization is not justified, as my intrinsic value calculations suggest a $50 fair share price.
• Overvaluation might not have been an issue in the current bullish market if the company had continued to demonstrate the same revenue growth and profitability levels as during the pandemic.
• However, Tesla's global market share is diminishing notably, and even price discounts are not helping.
• In addition to declining revenues, Tesla's profitability profile is also rapidly deteriorating.

My thesis

The fact that Tesla's ( TSLA ) market capitalization is multiple times higher than its intrinsic value means that the stock and Elon Musk have a huge fan base believing in long-term growth potential....

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