Is there a Tesla bubble?

December 10, 2024

Is there a Tesla bubble?

You bet. As of December 10, 2024, Tesla (Ticker: TSLA) is approaching an all-time high valuation, with a current share price of $401. The record closing price stands at $410, achieved on November 4, 2021. This gives the American electric car maker a market capitalization of $1.26 Trillion. 

Tesla is trading at 110 times earnings. The average price to earnings ratio in the "traditional" automotive industry (excluding Tesla, and also excluding Chinese car makers) is about 6.7. That is, while almost all car makers in the world trade at 7 times earnings in average, Tesla is trading at 110, which is 15 times the industry average. 

Major Automakers (Excluding Tesla and Chinese car makers) ranked by P/E:

1. Subaru Corporation (Ticker: 7270.T): 12.0
2. Suzuki Motor Corporation (Ticker: 7269.T): 10.0
3. Toyota Motor Corporation (Ticker: TM): 9.70
4. Isuzu Motors Limited (Ticker: 7202.T): 9.0
5. Honda Motor Co., Ltd. (Ticker: HMC): 8.0
6. Mazda Motor Corporation (Ticker: 7261.T): 7.5
7. Mitsubishi Motors Corporation (Ticker: 7211.T): 6.0
8. General Motors (Ticker: GM): 5.5
9. Toyota Motor Corp. (Ticker: TM): 5.5
10. Nissan Motor Co., Ltd. (Ticker: 7201.T): 5.5
11. BMW (Ticker: BMW.DE) 5.2
12. Mercedes-Benz Group (Ticker: MBGAF): 5.0
13. Ford Motor Co. (Ticker: F): 4.8
14. Volkswagen AG (Ticker: VWAGY): 4.6
15. Stellantis (Ticker: STLA): 3.8
16. Hyundai Motor Company (Ticker: HYMTF): 3.1

These car companies sold about 66,582,531 million cars in 2023. Here they are ranked by sales in 2023

1. Toyota: 10,307,395
2. Volkswagen: 9,239,575
3. Hyundai Motor Group: 7,302,451
4. Stellantis: 6,392,600
5. General Motors: 6,188,476
6. Ford Motor Company: 4,413,545
7. Honda: 4,188,039
8. Nissan: 3,374,271
9. Suzuki: 3,225,359
10. BMW: 2,565,332
11. Mercedes-Benz: 2,450,000
12. Kia Corporation: 2,731,370
13. Renault: 1,435,847
14. Mazda: 1,182,034
15. Subaru: 889,975
16. Mitsubishi 696,262

Tesla sold about 1.8M electric vehicles last year (2023) and has sold about 1.2M cars this year. BYD Auto of China sold about 3M EVs in 2023 and has sold about 3.8M this year.  BYD is trading at a P/E of about 21 (3 times the traditional car industry average). Tesla, being American and owned by Trump's protege, South African immigrant, Elon Musk, is trading at 5 times the P/E of BYD (Chinese and indirectly controlled by the CCP like everything else in communist China).

Is Tesla overvalued right now?

In our view, Tesla is significantly overpriced right now. We see it as "F" rated company and we hold a strong Sell recommendation. Unfortunately, we didn't see the Trump effect coming over Musk and began shoring Tesla too early. We are down 33% on our short position as Tesla continues defying our logic and adding more and more value every day.

We are holding our short position and may soon add to it. We believe that sooner or later reality and gravity will catch up with Musk and Tesla. We believe that Tesla should not be trading at more than $200 per share, and should trade at a maximum of 40 times earning. 

Of course, we have zero influence on the market. On the contrary, we assume that the true market influencers and puppeteers will continue pushing the Tesla Gospel during the Second Coming of Trump. The Tesla bubble will most likely continue its cosmic inflation until the Musk angel falls out of the grace of the Trump Messiah. Now, if the South African immigrant keeps brown nosing (or bribing) the Messiah, and the Messiah keeps blessing him as his proverbial wingman, chances are that the Tesla bubble will hold way more air before the eventual trumped up pop. 

That is our prediction and we may be wrong. We have been wrong many times before and will continue making mistakes. We are wrong at least 50% of the time. Most recent failure was when we thought that the Trump Media & Technology Company (Ticker: DJT) would continue rising above $45 per share. It's down to about $35, and we're down about 30% from our entry point. 

We were also super wrong 4 or 5 years ago when we bought a bunch of crappy crypto coins (Solana, Cardano, Polkadot, Metaland, etc) just to see them go down about 80% or more during Biden's first three years in office. They're crypto craps seem to be coming back now during the Second Coming of Trump. We're holding onto them to see if we can at least break even before the crypto bubble deflates again. Crypto is really the biggest scam on Earth after the Messiah. 

The future has not been created yet. That is the best part of being alive. We all contribute to creating the future as we travel over space time. History doesn't fully repeats itself, but many things are cyclical in nature and look very much like. Speaking of look alikes, isn't it incredible how much the Syrian rebel leader, Abu Mohammed al-Jolani, is a Fidel Castro look alike? In any event, rest assured that financial bubbles will continue coming and going just like dictators, rebels, and Messianic leaders. It's all fun and games. Enjoy your brief monkey life while it lasts. Sooner or later you'll be either dead or too old and crappy wearing diapers again. If chronic diseases don't get you, sarcopenia will and you will be bed ridden waiting for your eternal rest.

Now you know it. Find us on the web at www.creatix.one