Tesla – the crack of the stock market?

Tesla – the crack of the stock market?

You either sell crack rock or have a wicked jump shot.

Tesla seemingly does both – figuratively of course. When I read around some of the media pundits, social media postings and news articles and I find the Tesla stock story fascinating. Lets take a look at some investment analysis of the Tesla stock. I’m not here to be a bull or a bear in this position. There are many things that I love about this organization and Mr. Musk. There is no denying he has a kick ass and take names later attitude that resonates with investors.

The thing I find most interesting is when you start to break down the numbers a bit. Let’s take a quick look at the numbers through the first two quarters of 2017. The figures are pulled directly form the respective press releases.

The Big 3

It’s hard to deny the market exposure, especially in the Americas, with General Motors and Ford. These two American powerhouse manufactures selling a sh*t ton of vehicles. Check out some of the numbers: 

When you look at some of the number it doesn’t make a lot of sense. Tesla’s market capitalization is 114% of General Motors and 135% of Ford’s. In contrast, Tesla’s vehicle delivers are approximately 1% of General Motors and approximately 2.8% of Fords. The revenue for Tesla represents about 7% of General Motors and Ford. The net revenues speak for themselves.

It’s interesting to look at these compared to their market cap. It’s clear that investors are relying on the wicked jump shot to lift this organization onto some next level sh*t.

 

When you look at the numbers through the end of 2016 – total assets against total liabilities GM and Ford really start to shine again – Tesla doesn’t look as attractive. General Motors is the clear winner here.

Again this leads to more speculation in the equity pricing as opposed to valuation. This type of speculation creates more volatility. As it is with any speculative investment – keep your position size controlled within your risk level and range. You don’t want 100% of your net worth riding with Elon. You might be saying to yourself – duh! We’re not buying Tesla based on valuation, but based on it’s future innovation  – Battery storage technology, hyper loop, all electric everything and Solar City spreading like a California wildfire…

Tesla announced recently that they are seeking another capital raise by issuing more debt – not more common stock. As an investor… I’m not sure I want to be a debt holder of this companies paper. They really have not shown through action that their wicked jump shot will actually hit the rim… Seems their biggest offering is that rock – leaving you wanting more Elon.

**disclosure; I do not currently have a direct position in TSLA. I’m sure I have exposure through mutual funds and ETF holdings. **




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