Until now, you must have heard about TSLA stock and the the guy behind world’s most known electric car Tesla – Elon Musk.
I decided to deep dive into this stock today, and discuss what the future brings for us all. Let’s start.
TSLA stock – numbers don’t lie
The first thing we must do when valuing a publicly traded company is to look at the numbers. They won’t tell you everything, but it’s a great start. When I say “numbers” I don’t mean a market cap, but income statement, cash flow, and balance sheet combined. Anyone can read a market cap, but a few can read financial statements.
Tesla is an interesting case leaden by a sometimes “crazy” CEO called Elon Musk, a kind of “love it or leave it”. When it comes to Tesla, numbers can’t lie: their revenues are skyrocketing since 2012. From $413 million in December 2012 to almost $54 billion in 2021 as shown in Figure 1.
Figure 1 — Revenue TSLA
Source: Seeking Alpha
The problem is that Toyota, the top-tier car manufacturer in the world, had a revenue of $238 billion in 2021. This number was over 4 times higher than Tesla. Even though, as of September 2020, Tesla had more than twice the market cap of Toyota and almost as high as all the others automobile companies combined as shown in Figure 2.
Figure 2 — Automobile Giants
Source: Yahoo Finance
One of the conditions to join S&P500 is to have at least four consecutive quarters of profitability and Tesla did it in late 2020. When this happened, hedge/mutual funds that had S&P 500 as a benchmark had to buy TSLA somehow. The results we already know:
Figure 3 — Price Chart
Source: JR Research
The TSLA price started to decline after September 2021, and it hasn’t come back to its ATH ever since. It’s hard to say what the future of Tesla will be, but there are some things that we can’t forget about the company: It doesn’t stop growing its revenue, expanding its horizons overseas, building top-of-the-edge technology, and spending more money on R&D than all others major automobile companies combined.
We can’t be sure if Tesla will be led to glory in the upcoming years, but we know this: Elon Musk is an interesting human being. He buys and endorses Dogecoin, his mother has minted some “cool” NFTs and a cryptocurrency named after his dog’s name surged about 2400%. Amazing accomplishments. In addition to that, Elon has been sued for $258 billion (almost 5 years of Tesla’s revenues) over allegations of a pyramid scheme to support Dogecoin.
But there are also things that we can’t forget about him: he has led Tesla to be one of the biggest automobile giants in the world in a short period, and he has led SpaceX to be the first private company to send a spacecraft to ISS, to manage to land a rocket and probably will be the first company to successfully land on Mars. When thinking about buying Tesla we need to balance all these things.
If the earth is the cradle of humanity, then humanity will have to leave its cradle some day and it should happen on a SpaceX ship. Even if you don’t like Elon, even if you think he is guilty as charged, and even if you don’t trust that there will be a bright future for Tesla, it looks like the fate of humanity is in the hands of someone who buys Dogecoin and there is nothing you can do about it.
What is your take on the Tesla car manufacturer company and its stock TSLA? Let us know in the comments on socials.