The growth story for Tesla in the last year has been phenomenal. So phenomenal, in fact, that most analysts have raised their price-point targets on the company. The stock has gained so much ground in the last year that even analyst targets continuously lag behind the supersonic increase in Tesla’s valuation.
Tesla has gone from being valued just under Honda Motors to being valued larger than the next five auto-makers, combined. Toyota, Volkswagen, Mercedes, General Motors, and Honda. Tesla is larger than all of these.
On paper, at least.
Tesla has bedazzled every analyst’s expectation — except one: Gordon Johnson.
Gordon has focused on one thing: Tesla is making a profit on tax credits. Specifically, Gordon referenced that Tesla’s first-quarter 10Q regulatory filing shows the company recognizes revenue on the actual transfer of ownership. He suggested that this translated to a revenue bump for Tesla — one that will run out quickly.
Furthermore, Gordon stated that, when removing the tax credits, Tesla has only shown positive net income in four of the 26 quarters.
Even with Gordon’s analysis, most of Wall Street remains confident. Even when they’re negative.
Among other concerns some investors may have, the most popular ones are as follows:
- How much competition will there be in the EV and AV space?
- How quickly will the transition between IC and EV actually be?
- Will hybrid IC cars make a more popular choice when consumers gradually look for the next set of options in a car?
- Will Tesla change their minds about selling parts to those who want to DIY a salvaged Tesla? Will this finally lower the insurance cost for many Tesla owners?
- Will autonomous driving and FSD be a true reality?
- Will Battery Day exhibit the next level in technological advancement for an EV’s range?
- Will Tesla fix their production defects as they scale into mass distribution/production?
And, perhaps the most fundamental question at hand:
How does Tesla expect to maintain a valuation that is as large as the entire auto industry itself?
Auto companies, generally speaking, work on margins as small as 10%. Tesla has sold about 367,500 cars in 2019. Between Toyota and Volkswagen, over 20 million were sold. Yet, Tesla has easily surpassed both companies combined.
Tesla has had a 10-fold growth since last year. When it passed $700 a share, Elon had tweeted this:
This is the emblem of the situation at hand today.