Is Tesla Stock Worth $50 Or $500?

JUN 3 2014 BY ERIC LOVEDAY 14

Tesla's New Facility Is In Lothrop, California

Tesla’s New Facility Is In Lothrop, California

Shortly after Tesla Motors reported its Q1 earnings, new forward-looking projections were released.

These projections are now so diverse that some scenarios see Tesla stock at $504 in 2019, while others put the stock at only $48 in 2019.

Market Watch presented its bull and bear scenarios for Tesla Motors:

“Under our bullish scenario, in 2019, Tesla can earn $18 per share and trade at a P/E (Price-Earnings Ratio) of 28.  This puts the stock at $504.”

“Under our bearish scenario, in 2019, Tesla may earn only $3 and trade at a P/E of 16.  This puts the stock at $48.”

Even Market Watch has no clue as to which scenario will play out to be true for Tesla Motors:

“Obviously, there is no way to know with certainty which scenario will come true. For most stocks that we analyze, there is not such a large divergence between the bullish scenario and the bearish scenario. The size of the divergence indicates that this is a high-risk/high-reward situation.”

*InsideEVs is not a financial site.  We do not provide financial advice or guidance.  Market Watch is a financial site, but even they seem unable to provide sound financial advice in relation to Tesla Motors.

Source: Market Watch

Categories: Tesla

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14 Comments on "Is Tesla Stock Worth $50 Or $500?"

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The statik I remember from gm-volt.com did provide financial advice and as I recall it was very good around the time just before and during the financial/auto crisis. Certainly better than some talking heads who have a spread an order of magnitude apart only 5 years out.

One of the many things I enjoy about Elon Musk is his strength to break away from the herd. Whether it be taking on the well established journalist, marketing in a completely different manner, providing online updates, building a battery plant that everyone says is too large or unnecessary. As Elon points out there will be hundreds of gigafactories and the batteries are the largest expense of the product. And yes, best of all, NOT playing by the rules of Wall Street. I haven’t a clue what the real stock price should be and I could care less what the MF (that’s Motley fool OR otherwise) or other stock analyst says it should be.

When the most important thing about Tesla is the stock price, then you know something is wrong. It is spoiling the benefits that the EV industry can bring. If Tesla were a private company, it would have had lower sales because it wouldn’t have the constant coverage on CNBC and all the wall street goings-on. Plus, many people betting on the stock used gains to pay for their car. That won’t continue for much longer with prices as they are now and under pressure due to the current view of the future with Tesla saying they will need to spend more to grow – thus keeping a negative p/e ratio for some time to come.

“I’m thinking of a number between one and a million.” – Market Watch.

Isn’t it strange that MarketWatch’s worst case scenario doesn’t involve Tesla going bankrupt? GM and Chrysler did recently. Even though they still exist, their former stock holders got zeroed.

Not that I think this will happen to TSLA, but if you are conceiving the worst case scenario, bankruptcy has to be one of them.

@Josh, the biggest issue is put off for the future. That is repayment of the bonds they have. If necessary, new bonds or stock issues may need to be floated to pay off those bonds. That means possible dilution of shares and as such, the price per share will fall. Every quarter – you do see # of outstanding shares going up but that doesn’t get talked about much. Eventually, due to R&D costs, growth costs and factory construction, they will surely have an emerging stock price under $100. It is just a matter of when.

Remember almost all of Tesla’s debt is convertible notes.

Unusual in that Tesla has the option to pay those notes in cash or stock.

There almost certainly will be dilution but almost equally certain is increase in overall value of the company. Management stock options will continue to be issued. After all, Musk is not really working for CA minimum wage 🙂

I doubt we ever see TSLA at $150 ever again.

I don’t think Tesla has more than two convertible bond issues outstanding. The second, funding the ~2bb, doesn’t have conversion until the stock reaches above $325, I think. The first got there sooner than expected. Can we be talking about big dilution here, or just a few stragglers who didn’t get the memo?

I agree on the roll-over risk. They either spend it, and make it work, or sometime around 2019 face the need/necessity for more loans. But they haven’t even spent most of it, yet. The beauty of leaving it idle is the 0.25% interest rate. It’s the will to fund them at this rate, for, ahem, a B- credit, that makes for an advantage.

S&P was pretty light weight, pointing to stuff everyone pretty much knows.

I think Tesla stock is at least over priced by 40% in that the Model X is turning into a Turkey and the Giga factory is still up in the air.

Ugh. More anti-Tesla predictions in the same vein as old anti-Tesla rants dating back a decade like:

“The Roadster is Vaporware”

“The transmission problem will kill the Roadster”

“Tesla won’t survive the end of Roadster production”

“The Model S is vaporware”

“The Model S won’t ever ramp up in production”

Etc…

I guess we can add onto that list of BS two more brainless anti-Tesla talking points:

“The Giga-factory is vaporware”
and
“Model X is vaporware/won’t succeed in production”

It is funny how many times in a row all the anti-Tesla trolls can be wrong, and yet still come back with a straight face with more of the same old BS claims about Tesla’s future.

Interesting question, 6 months ago i would say ‘500’, now i’n not so sure, the Big Boys are finally waking up to ev’s, while the Model X postponing shows that Tesla r&d resources are streched and can’t keep up with Musk ambitious goals.

So, increased competition plus delays from Tesla can mean that in the future they might not make it alone, but they are too valuable to go bankrupt, before that Mercedes, Toyota or other established OEM would have bought it

A stock is worth what people will pay for it.
The difficulty lies in determining whether the current price of the stock is over or undervalued. Why is the range of estimated fair value so large?
Many traditional metrics for making that determination are of little value in regards to Tesla.
There is little to go on from a historical perspective, since Tesla has such a short history. You can’t compare it to other pure electric car manufacturers as none exist.
Intangibles, such as the almost evangelical fervor with which owners of Tesla and dedicated employees show the company cannot be measured directly, but will have a great influence on how the company does in the future.
I would split the difference and say it is around fair value now.

I see TSLA as a product of two things, price and earnings. There’s the 100k-500k units we kick around, and $$ that will contribute. Then, there’s the fervor in the multiple we assign.

Some autos aren’t fetching 10X. TSLA, I’d go north of tech stocks w/~20-25X.

I’m in and my advice is worthless.

“Is Tesla Stock Worth $50 Or $500?” The answer to that question is a resounding “YES!”. Yes, Tesla stock is worth $50 or $500 (or somewhere in-between). The question is just how far out into the future do you price in potential future successes. The biggest mistake most people make when trying to value stocks is failing to understand that the value of a stock is based upon what it will be worth IN THE FUTURE. Buying a stock is largely about how much you expect to sell the stock for later (along with dividends, but let’s not get off track). Tesla is still growing like crazy, with more Model S chassis based vehicles, and an entire line of GEN III chassis based vehicles still to come. And depending upon how many of these future lines of cars you price in, over how many years, the value of TSLA stocks can vary wildly. Why this company chose 2019 is arbitrary in itself. There is nothing special about 2019. If you choose 2016 or 2022 and try to value future sales, you might come up with wildly different P/E numbers. What if I’m buying TSLA for an IRA account, and can’t… Read more »