Tesla's CEO, Elon Musk, Admits That TSLA Is Overvalued — So, Now What?

It's funny, I recently saw a comment scrolling across our ticker that noted we feature a lot of stories about Tesla. Well, duh.

It only is the most interesting automotive company doing business today. Of course it will get more coverage as people's interest is strong in its product and more.

Well, here's one more story for you.

While Agent 009 posted this same article from The Guardian and discussed the latest issues at Tesla concerning its working environment for its factory workers on the front lines, I think someone needed to point out the obvious. Perhaps not so obvious to some, at least.

There's a lot of money on The Street that's shorting Tesla. That's because many investor theses come to the same conclusion: It is grossly overvalued. Turns out they're not alone because TSLA's own CEO, Elon Musk, agrees.

See the excerpt from The Guardian here:

...Musk also said that Tesla should not be compared to major US carmakers and that its market capitalization, now more than $50bn, is unwarranted. “I do believe this market cap is higher than we have any right to deserve,” he said, pointing out his company produces just 1% of GM’s total output.

“We’re a money-losing company,” Musk added. “This is not some situation where, for example, we are just greedy capitalists who decided to skimp on safety in order to have more profits and dividends and that kind of thing. It’s just a question of how much money we lose. And how do we survive? How do we not die and have everyone lose their jobs?”...

So, now what?

Do YOU think that shares of TSLA will continue pushing higher, or is the party set to end soon? Remember: The Model 3 is just around the corner.

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TheSteve - 5/20/2017 10:30:53 AM

+3 Boost

In today's era of Fake News and Alternative Facts, I must say that the alleged Musk quote sounds uncharacteristic, so I'm suspicious.

That aside, I believe Tesla stock will continue to be bid up, just because there are so many Tesla believers with an eTrade account. When the TSLA bubble bursts, the downward slide will be even quicker as the masses suddenly lose the faith.

Agent00R - 5/20/2017 11:22:42 AM

+5 Boost

Honestly, I have no clue where Tesla will go.

I would have expected a collapse by now — and have made good money playing both sides of the ball — but it just continues to soldier on.

SanJoseDriver - 5/20/2017 2:24:16 PM

-3 Boost

This is the second time he said the stock value was overvalued (first was years ago). I guess he doesn't want expectations getting too much out of hand so it is not a roller-coaster for investors with huge swings.

I think there is a path to profitability, right now the biggest risk seems to be Audi if they actually bring some true S/X/3 competitors to market. Mercedes also announced home batteries (at 4 times the cost of the Tesla ones). At least it is validating the EV market finally.

An article was just published about the Model 3 having a EBIT break-even sales price of $41k. They are forecasting a $42k average sales price, but that does not include the 2018 dual motor and performance models or software upgrades to full self driving (another $5-8k), or the Tesla Network carsharing program.

We'll have to wait and see. Now is probably not the best time to either short or buy shares unless you are going way long.

CANADIANCOMMENTS - 5/20/2017 5:32:47 PM

+3 Boost

It is a long play stock. I don't see Tesla staying independent forever. I can see GM, VW or Toyota buying them at some point to access their technology and to own such a strong brand. But if the Model 3 is a hit, the CUV that follows too, the glass roofing tiles and the home energy storage device, who knows? I'd follow SanJoseDriver (he/she seems to know the way... all the stars that never were are parking cars and pumping gas) and be prudent. This stock is a hold for now.

MDarringer - 5/20/2017 6:36:42 PM

+5 Boost

The only value Tesla has is its hyped name. It's technology is nothing game changing.

mre30 - 5/20/2017 6:33:05 PM

+7 Boost

Musk knows the 'plummet' is coming and he is putting this out there so he can claim moral superiority and say "I told you so" when the stock is down by 40% in two months.

He will shrug his shoulders when that happens and act as if its no big dealer. He is a master communicator. Liar? I like 'master communicator' better.

HenryN - 5/21/2017 6:10:07 PM

+1 Boost

There's a saying in the trading crowd: "longs make money, shorts make money, pigs get slaughtered". Based on the content of the negative comments above, I think I just entered a pig slaughter house. A positive thing about pigs is they make good eatin' bacon.

MDarringer - 5/21/2017 6:47:46 PM

-2 Boost

Bacon in a hamburger with cheese on it between a donut bun....yum.

MorePower - 5/23/2017 1:31:00 AM

+3 Boost

A lot of companies, both in and outside of the technology industries are over valued.

That being said, the market does not seem to think that Tesla is over valued at the moment, so it is not. Without any major competitors in the segment, until another entity is able to produce a product(s) that consumers feel represent a better value for their money or market forces change against them, their price will remain high.