When in a bubble there’s no telling when it may end. Tesla is certainly one of 2020’s bubble companies. The more TSLA shares climb the more investors chase, largely motivated by fear of missing out.
Is Tesla disrupting the auto industry? Sure. The question is how much do you pay for a disruptor when much of future revenue and earnings have already been pulled forward in the current valuation (20x EV/Revenue, 233x EV/ cash flow) despite Tesla’s 1% market share, nascent Autonomous capability and modest Energy business?
- EV competition is looming. Most of the traditional OEMs have EV programs in place. We view the slate of new EV auto companies as pretenders. Regarding the old guard, GM sold-out its $112K EV Hummer in 10 minutes. The company plans to invest $27 billion on EV and Autonomous driving technology over the next five years as GM plans to introduce 30 new EV models by mid-decade. VW plans a similar EV push and plans to invest $86 billion in EV models over the next five years.
- See our recent overview – “Tesla Mythbusting” – by clicking HERE.