Don’t take advice from someone who doesn’t have to live with the consequences. With all the other media talking about Tesla (TSLA), it’s worth taking a closer look at the price it’s offering. A thorough analysis of the risks associated with a stock market requires that one leave behind traditional political and cultural beliefs. Eager to engage in petty fights at the door. Successful entrepreneurs are open-minded people who look beyond the noise and emotions to find the deep value in places where others are afraid to look. And in today’s bear market, survival is as important as survival.
Point to Tesla’s declining share price without including a sign of a new change. Year-to-date performance for Tesla using multiple indicators.
- Nasdaq Tracker ETF: -32%
- Google: -37%
- Tesla: -57%
- ARK Innovation ETF: -66%
Even accounting for ARK’s ETF holding a 7.5% weighting in Tesla, it’s still a basket of tech stocks below. -66% year-to-day. To say that Tesla’s stock is falling seems like an understatement, especially when you take into account their high beta. A higher beta stock is expected to be more active than the index. As the shares went through the month, no one had a problem with the high beta. But when they see the same actions at the bottom, suddenly the world ends. With its largest shareholder selling shares, pressure on Tesla’s stock price should be expected.
Investors in Tesla stock, or potential investors, should be aware that they are selling a good asset. The only concern is Tesla’s viability in the face of a lower price drop, regardless of the cause of the drop. Let’s see how Tesla gets their money and from where.
What Tesla does
We refrain from writing about Tesla because the last thing this world needs is another opinion about Tesla. As with most fanboy stocks, analysts will often have a very valuable insight into the most important parts of the business making it difficult to get a simple explanation of how Tesla earns their money. money. We use their most recent 10-Q as a basis for today’s analysis.
Sales of electric vehicles comprise 95% of the company’s revenue. Americans who produce anger for a living may not buy Tesla cars, while they are attacking the brand as much as possible, there may be a drop in demand in the United States where it comes from half of Tesla’s revenue. Because we are in a recession, let’s assume there is a drop in demand, and income growth is slowing. The same goes for China where demand is said to be slowing and competition is intensifying. Because of these ideas, what are the problems that may arise from Tesla that require them to find money by providing dirt-food equity, or by making debt?
Think about it
Although Mr. Musk spends a significant amount of time with Tesla and is very active in our management, he does not give all his time and attention to Tesla. Mr. Musk also currently serves as the Chief Executive Officer and Chief Technical Officer of Space Exploration Technologies Corp.
Notes: Tesla 10-Q
An important concern is being raised by many people around the attention of Elon Musk in his latest business, Twitter, a company that we think has a high chance of survival, and maybe even flourish. But the truth is, is Mr. Musk? It is actually mentioned as a risk in the company’s SEC filings where they note that he is the CEO and CTO of SpaceX. Then there’s the selling of incense, the flame, the big boring holes, the development of brain-computer interfaces, and Zeus knows what else.
Let’s say Mr. Musk pulls a Winery and is no longer changing the Tesla equation. The stock will temporarily explode, change the CEO, and life will go on. In fact, there’s a good argument that Tesla should get a new CEO now that they’re firing all four electric motors.
Perhaps the researchers have difficulty separating the actions of Elon Musk from the daily work at Tesla. For example, a lot of focus has been placed on Musk’s recent sales.
He remains Tesla’s largest shareholder with a 13.4% stake, according to financial market information firm Refinitiv. Last month Mr. Musk sold 19.5 million shares of Tesla worth $ 3.95bn, just a few days after $ 44bn of the use of social media Twitter.
Let’s put that in context. The cost of that purchase represented only 5% of Mr. Musk at today’s prices. Having a large percentage of one’s wealth tied up in a single company’s stock makes it more likely to sell. That will put downward pressure on the share price.
Mr. Musk is currently playing a risky game with his personal money to reduce debt payments to Twitter, a company that owns 74% of. When evaluating Tesla, we need to separate the financial decisions of Mr. Musk from what is happening in the company. So, what happens when Mr. Musk a call on all the things Tesla is putting up for approval?
A Bloomberg report shows that Mr. Musk is borrowing money at a loan-to-value ratio of 20%. This means that the stock has to sink further before he is in any serious position as a call. Such an event might trigger the automatic purchase of shares in a regular account, but one would expect in academic terms, the behavior would be different. . Issuing a large number of shares results in a large drop in a stock’s price, which is in the investor’s best interest. Grants proceed slowly. The big question surrounding the impact of Tesla if Mr. Musk runs into personal financial problems. Putting the sale of the stock on the price of the stock outside, it does not seem like a big risk for Tesla if the money of Mr. Musk is like a pear.
Our approach to Tesla
Two and a half years ago, we wrote a piece titled This is why short sellers are shorting Tesla at the time the stock was trading at about $110 a share at a sdo vadvertising ratio (SVR) is 14.5. Four months prior to that, the stock was trading at $30 representing an SVR of 4 (that’s when the Rona hit the markets in March 2020). Today, trading volume at SVR is 5.5.
- $475 billion market capitalization / (Q3-2022 revenue X 4)
475 / (4 * 21.45) = 5.5
If stocks were trading at the same price they did when the Rona temporarily devastated Wall Street, then the stock would be selling at $108 a share. So, there’s definitely room for more leverage, and the media mania surrounding Musk’s golden ship needs to be taken with a grain of salt.
We’ve listed Tesla in our tech coverage as something, even though it’s too big a company to fit into our disruptive tech investment strategy. Once a company reaches a certain size – above $100 billion – we start to see a cut in our revenue. Google was a company we invested in when it started with a market capitalization of $23 billion and eventually became one of the largest companies in the world (we got out of our position when they got deep into politics and started hiring actors). We don’t have a dog in the Tesla race, but we know a lot of our readers and subscribers. Tesla shares are currently trading at historic lows, and the falling share price does not diminish the chance that the company will survive whatever the bear market throws at it. The chance of Tesla going bankrupt seems very low.
Almost half of our audience is from abroad, which means they are watching with curiosity to see what the US is like. Say anything about Elon Musk shows a political statement, so we need to separate the man from his big company, Tesla. He’s always distracted from focusing on Tesla, whether it’s selling perfume and fireworks, drilling big holes, reading monkeys’ minds, or shooting rockets. used in space. Did Twitter’s extra stress finally break the camel’s back? Maybe, but Tesla seems to be in a good financial position to weather any storm that blows over the blue bird or anything else.
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