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Review of Tesla stock (TSLA)
04 Feb 2023 (576 views)  

1. I hold 3,000 Tesla shares at an average cost to $213, totally $830,000. At the current price of $190, the stock shows a loss of $69,000 USD.

2. A few months ago, I held 1,500 shares at an average cost of $250. The stock price dropped to $100, giving a loss of $215,000 USD.

3. I bought another 1,500 shares when the stock price dropped below $200. This increased my holdings and brought down my average price. 

4. At the worst point when the price was $100, the price earning ratio was around 25 times. Some speculators expected the price the price to drop to $50. It did not happen. By waiting, they missed the chance to enjoy the sharp appreciation of the stock price to $190 today.

5. At the current price of $190, the PE ratio is 50 times. Some analysts pointed out that Tesla stock is overvalued. The average PE ratio for good quality stocks is 20 times. 

6. I consider the PE ratio of 50 times to be justified for the following reasons:

a) Tesla will see significant growth of 50% annually in its electric vehicle business over the next few years. This will justify a high PE ratio of 50 times.

b) Tesla will be introducing several new models, such as the semi truck, cyber truck and a compact car to meet its revenue and earnings targets over the next few years.

c) Tesla is expected to build several gigafactories over the next few years in several locations around the world. These gigafactories are efficient in producing the vehicles at competitive prices.

d) There is a big potential for the energy business (comprising of mega packs, power walls and solar panels). This new business segment is projected to be as big as the vehicle business. 

e) Tesla is expected to derive significant revenues from its self driving software, robo-taxis and humanoid robots. These innovations may take a few years to materialize but they are catalysts to propel future growth in earnings.

7. The biggest risks are high inflation, global slowdown and recession and the military conflict. They can turn out to be very bad, causing global stock markets to collapse. 

8. In spite of the risks, I am willing to hold my investment in Tesla for the long term. I may increase my holdings when it passes the $200 barrier.

 Note - I am sharing a personal view. This is not investment advice. 

Tan Kin Lian

Review of Tesla stock (TSLA)
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1. I hold 3,000 Tesla shares at an average cost to $213, totally $830,000. At the current price of $190, the stock shows a loss of $69,000 USD.

2. A few months ago, I held 1,500 shares at an average cost of $250. The stock price dropped to $100, giving a loss of $215,000 USD.

3. I bought another 1,500 shares when the stock price dropped below $200. This increased my holdings and brought down my average price. 

4. At the worst point when the price was $100, the price earning ratio was around 25 times. Some speculators expected the price the price to drop to $50. It did not happen. By waiting, they missed the chance to enjoy the sharp appreciation of the stock price to $190 today.

5. At the current price of $190, the PE ratio is 50 times. Some analysts pointed out that Tesla stock is overvalued. The average PE ratio for good quality stocks is 20 times. 

6. I consider the PE ratio of 50 times to be justified for the following reasons:

a) Tesla will see significant growth of 50% annually in its electric vehicle business over the next few years. This will justify a high PE ratio of 50 times.

b) Tesla will be introducing several new models, such as the semi truck, cyber truck and a compact car to meet its revenue and earnings targets over the next few years.

c) Tesla is expected to build several gigafactories over the next few years in several locations around the world. These gigafactories are efficient in producing the vehicles at competitive prices.

d) There is a big potential for the energy business (comprising of mega packs, power walls and solar panels). This new business segment is projected to be as big as the vehicle business. 

e) Tesla is expected to derive significant revenues from its self driving software, robo-taxis and humanoid robots. These innovations may take a few years to materialize but they are catalysts to propel future growth in earnings.

7. The biggest risks are high inflation, global slowdown and recession and the military conflict. They can turn out to be very bad, causing global stock markets to collapse. 

8. In spite of the risks, I am willing to hold my investment in Tesla for the long term. I may increase my holdings when it passes the $200 barrier.

 Note - I am sharing a personal view. This is not investment advice. 

Tan Kin Lian