I've been following Tesla for the last few months. Reading about the company and Elon Musk has been great reading. I believe that the technology is there and the company is a technology darling.
The only problem is that the shares are grossly over valued. I've put the numbers through several different models and the valuation of the company just doesn't add up, unless everyone else that is investing in the company is expecting some kind of hyper growth which I have yet to ever see.
In Tesla's Q1 report, they report 4,900 in Model S sales and expect 21,000 cars to be sold by the end of 2013. Quarter by quarter, this is a 5% growth rate and an annual growth rate of 25%. Being generous and allowing for 50% growth and calculating against multiples of EBITDA it will take 5~6 years for the operating profits to reach anything near what the stock prices are right now. Based on PE multiple calculations, maybe after 4~5 years for the multiple to EPS will be in sync with it's current stock price of ~$125
TSLA is a great company but it's is grossly over priced and it's valuation is overly optimistic. I have no idea how long prices will continue to rise and holding a short position against the company seems risky because it is tough to tell how long the irrationality of price will continue to go.
When will the price come back down to something reasonable? I have no clue, but the next big event for Tesla is next month during the 2nd week of August when they report on their Q2 results.
