It kills me not to own shares in Tesla. I have been and remain bullish on the company’s future success since 2014. It was the first stock I ever bought. Last year I once held more than half my net worth in Tesla at $212. But I strongly believe it will come down before it goes up.
Forget comparing it to other car companies (of which it is now the most valuable). With a market cap of $257B, Tesla is currently trading as one of the top 25 most valuable companies in the world. I believe it can and will deserve that valuation in time. I believe it can grow to be in the top 10 and even the top 5 eventually, but I do not see how anyone can argue that it is there yet.
Tesla today is worth more than either Amazon or Facebook was 5 years ago. One can argue about inflation or how those companies are nothing alike and it is a useless comparison if they like but I think it is helpful to context. Blind bulls may get angry and say whatever will make them feel better but they would fail to realize that I am actually on their side. I love Tesla and I am still rooting for the company and its ambitious leader as I have been all along. That does not stop me from being able to believe that it is heavily overvalued right now.
For what it is worth, I do not think Elon Musk was joking when he tweeted “Tesla stock price is too high imo” just a couple of months ago. As of today, the price has nearly doubled since then.
The reason I think it is important for bulls to stop overinflating the price is that for any amount it rises over its fair value, it will likely have to fall at some point, and there are hundreds of billions of dollars on the line for industries, companies, and wealthy individuals that want to see that happen.
In the beginning, Tesla threatened big oil, car makers, and car dealers. If and when they roll out full autonomous driving and trucking, Tesla will be threatening insurance (because autonomous cars are much safer), truckers, unions, Uber, Lyft, and other autonomous competitors like Google. I believe it is conservative to say that hundreds of billions of dollars are praying for Tesla to fail. This massive opposition will not “go softly into that goodnight”, as they say.
To be clear, I am rooting for Tesla all the way. Anyone who knows me knows that. Tesla is an awesome company. But today it is overvalued.