The current valuation would be very good if they sold around 60000 Model S/year:
They have a Market Cap of $16B.
Estimated longer term profit per Model S sold is around $15000 (as far as I remember); I think they are aiming for around 15% profit margin for Model S.
So at 60000 cars/year they would profit around $0.9B or trading at around 17x profit. Which wouldn't be terrible for a growth-company.
Problem is that they are currently only on target for around 20-25000 model S/2013 and they didn't have that big a profit margin last quarter.
As always, the next quarterly reports will likely tell if they are on track or not. Last quarter was just the first profitable quarter for Tesla ever, so it is hard to say anything. Nobody even knows if demand for the Model S is sustainable, as Tesla received around 20000 preorders.
It isn't an outrageous valuation compared to e.g. Amazon, but it is definitely based on the company achieving massive growth, so if the next quarterly results do not reflect that, the stock will likely take a 10-15% dive over night.
On the other hand, if the Model S is the new Prius (as some people believe), they might sell 200000 cars/year within a few years. Musk is definitely aiming for this, and the factory they have has a capacity for something in that ballpark.
They also haven't tapped into the European market yet. E.g. Scandinavia has high taxes on petrol based cars, so the Tesla S is significantly cheaper than other "luxury" cars in Scandinavia. I suspect Europeans in general have shorter commutes, so perhaps electric cars are doing better here. Then there is Asia...
It is a high-risk investment at this point, but it could go either way. The stock price currently reflects optimism.
It would be more than a 10-15% dive - the stock fell 18% in a single day a month ago after a (bullish!) analyst report from Goldman Sachs which had a lower price target than the current stock price. Tesla stock is insanely volatile.
You won't get anywhere with that argument. When Bitcoin tripled in value over the course of 1-2 weeks, if memory serves HN by and large had zero sustainability concerns.
Even further, those that were suggesting it was a bubble at 120 or 140 or 160 or higher were downvoted to oblivion. Kinda sad, given that the price right now on mtgox is 105
Problem is that they are currently only on target for around 20-25000 model S/2013 and they didn't have that big a profit margin last quarter.
As always, the next quarterly reports will likely tell if they are on track or not. Last quarter was just the first profitable quarter for Tesla ever, so it is hard to say anything. Nobody even knows if demand for the Model S is sustainable, as Tesla received around 20000 preorders.
It isn't an outrageous valuation compared to e.g. Amazon, but it is definitely based on the company achieving massive growth, so if the next quarterly results do not reflect that, the stock will likely take a 10-15% dive over night.
On the other hand, if the Model S is the new Prius (as some people believe), they might sell 200000 cars/year within a few years. Musk is definitely aiming for this, and the factory they have has a capacity for something in that ballpark.
They also haven't tapped into the European market yet. E.g. Scandinavia has high taxes on petrol based cars, so the Tesla S is significantly cheaper than other "luxury" cars in Scandinavia. I suspect Europeans in general have shorter commutes, so perhaps electric cars are doing better here. Then there is Asia...
It is a high-risk investment at this point, but it could go either way. The stock price currently reflects optimism.