Tesla: Dream Big Or Overpriced? The High Bar Of Justifying A Buy

Summary:

• Tesla’s current valuation reflects significant optimism in new ventures like Robotaxi, FSD, and Humanoid robot, warranting a Sell rating.
• My SOTP valuation suggests a fair value of $370 for Tesla, despite optimistic assumptions. ~40% of the value is from Robotaxi (cybercab).
• Elon Musk’s projection of 2-4m units annual production of cybercab looks super aggressive. Competitor Waymo only operates 700 driverless cars after six years of development.
• I believe Tesla is overvalued. A certain level of imagination is required, and you need Robotaxi to be very successful if you want to justify a Buy at this level.

Remarkable Rally

Tesla’s (NASDAQ:TSLA) share price surged more than 30% since early Dec., following Donald Trump’s victory in the presidential election. The jump in share price was driven by investor optimism that Elon Musk’s close tie with President Donald Trump could

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.