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Tesla stock price of $105 is grossly under valued
28 Dec 2022 (147 views)  


1. Many analysts have reported on two key reasons for the sharp decline in Tesla stock price this year.

a). Elon Musk sold $40 billion of Tesla stock to fund his purchase of Twitter. He now spends most of his time on Twitter, and appears to neglect the challenges facing Tesla.

b) Tesla saw a decline in orders for their EVs. Many people observed that there is a large inventory of Tesla cars "in every zip code" in America. Tesla also reported slowing sales in recent months in China. Tesla planned production cuts in China in January 2023.

2. In my view, the market had over reacted by selling the Tesla stock and pushing its price below its fair value. My reasons are:

a)  America buyers are holding back their purchase of EVs to enjoy a tax credit of $7,500 when they buy the EV in 2023. Telsa has to offer a discount of $7,500 to attract the customers to buy the car now. Tesla enjoys a margin of $15,000 (my guess) for each car, so they can still make a profit after giving the discount.

b)  The slowdown in sales in China is probably due to the temporary chaos caused by the relaxation of covid in China. This will be sorted out soon.

3. Although Tesla has a difficult time in 2022, the profit is likely to show an increase of at least 50% over 2021. (Earlier, the projected increase was 100%). When the financial results are released in last January 2023, the stock price is likely to rebound.

Tan Kin Lian

Note - this is a personal observation. I am not giving "investment advice"



 

Tesla stock price of $105 is grossly under valued
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1. Many analysts have reported on two key reasons for the sharp decline in Tesla stock price this year.

a). Elon Musk sold $40 billion of Tesla stock to fund his purchase of Twitter. He now spends most of his time on Twitter, and appears to neglect the challenges facing Tesla.

b) Tesla saw a decline in orders for their EVs. Many people observed that there is a large inventory of Tesla cars "in every zip code" in America. Tesla also reported slowing sales in recent months in China. Tesla planned production cuts in China in January 2023.

2. In my view, the market had over reacted by selling the Tesla stock and pushing its price below its fair value. My reasons are:

a)  America buyers are holding back their purchase of EVs to enjoy a tax credit of $7,500 when they buy the EV in 2023. Telsa has to offer a discount of $7,500 to attract the customers to buy the car now. Tesla enjoys a margin of $15,000 (my guess) for each car, so they can still make a profit after giving the discount.

b)  The slowdown in sales in China is probably due to the temporary chaos caused by the relaxation of covid in China. This will be sorted out soon.

3. Although Tesla has a difficult time in 2022, the profit is likely to show an increase of at least 50% over 2021. (Earlier, the projected increase was 100%). When the financial results are released in last January 2023, the stock price is likely to rebound.

Tan Kin Lian

Note - this is a personal observation. I am not giving "investment advice"