This article comes from Cailianshe
After breaking the $1 trillion mark at the end of last month, Tesla's market value has been improving rapidly in recent days, with a market value of $1.2 trillion. But the latest forecast by David Trainer, CEO of independent investment research firm New Constructions, is shocking. He believes Tesla's market value is overvalued by about $1 trillion and its share price may fall 88% to around $150 a share.
Tesla shares rose 1.3% to $1,229.91 on Thursday; the stock has risen by about 57% over the past month. Strong third-quarter delivery volume, performance report, and large orders for 100,000 cars by Hertz, a car rental company, have driven its stock price to soar.
Tesla's latest market value is basically equivalent to the sum of all traditional car manufacturers around the world, but Trainer believes that this number is meaningless. His basis comes from its model estimates in terms of sales and profits.
Trainer wrote in a report released Thursday:
"A valuation of $1.2 trillion means that Tesla's sales will exceed the total global passenger electric vehicle market, and by 2030, Tesla's profitability will surpass Apple."
His research focuses on how much Tesla's sales and profits need to reach to deserve such a high market value.
He believes that by 2030, Tesla must sell nearly 31 million cars each year to prove that the current valuation is reasonable. This figure is more than he expected to produce the entire industry by then.
His expectations are also supported by data from the International Energy Agency (IEA). According to the IEA's previous forecast report, the basic situation is that by the end of 2030, the global annual sales of electric vehicles will be about 28 million. However, the IEA also predicts that in the most optimistic situation, about 47 million electric vehicles will be sold worldwide each year by 2030.
It is worth noting that the IEA report was released in April, when many automakers have not yet committed to investing huge sums in automotive electrification and battery capacity. In August this year, U.S. President Joe Biden announced that his goal is to account for 50% of new car sales by 2030.
Of course, what Tesla currently lacks the most is bulls. Even so, most of them don't believe the company will sell 31 million cars annually by 2030. Morgan Stanley analyst Adam Jonas rated Tesla stock as a "buy" with a target price of $1,200, and expects Tesla's annual sales to reach about 8 million units by then.
Jonas believes Tesla will be more profitable than traditional automakers. But Trainer insists that Tesla's operating margin will be comparable to General Motors. He said that sales of 31 million vehicles mean that Tesla's operating profit will reach $131 billion by 2030, which is higher than Apple's current operating profit of more than $100 billion.
Trainer also said that if Jonas' prediction about Tesla selling 8 million cars in 2030 is correct, assuming Tesla's after-tax net operating margin is comparable to GM's 8.5%, it means that the company's annual profit will only reach $30 billion by then.
Of course, Tesla's recent profit margin has been at the industry's leading position, which is not surprising, because Tesla cars are popular and the company does not have to bear heavy pension obligations like its established competitors. Tesla's gross profit margin in the third quarter exceeded that of automakers such as General Motors, Ford and Volkswagen.
But in the long run, Tesla's profit margin is difficult to predict, depending on factors such as software sales (all automakers offer software features that can be sold through subscriptions) and battery costs.
However, Trainer believes that his assumptions are fair. He wrote:
"Abstract: Tesla provides a very low risk-reward ratio."
The bull camp is difficult to shake
Trainer's view is unlikely to shake Tesla's strong bull camp. Of the 44 analysts tracked by foreign media, 14 analysts set Tesla's target valuation above $1 trillion.
longs firmly believe that Tesla is a leader in the electric vehicle field and its sales and output will grow at an average annual rate of 50% for the foreseeable future. They also believe that electric cars will be more profitable than traditional cars, and that Tesla will maintain its cost advantage.
Many people who are optimistic about Tesla also believe that Tesla's energy storage business and possible autonomous taxi business will bring considerable sales.
Disclaimer:
Copyright of this article belongs to third-party authors
