Shanghai Auto Show a year ago$Tesla, Inc. (TSLA.US) $The booth is particularly lively.

A woman wearing a T-shirt with the words "brake failure" climbed onto the roof of Tesla, Inc. 's exhibition car and accused Tesla, Inc. of brake problems. From this, it is not difficult to find that Tesla, Inc. 's brake quality is not good, but the roof quality is good.

Since then, brake failure has become an insurmountable obstacle for Tesla, Inc.. Whenever a rider likes to mention Tesla, Inc. 's new car, he will be greeted: can you stop?

Today, a year later, Tesla, Inc. 's brakes have been repaired, along with Tesla, Inc. 's share price.

Since the beginning of 2022, Tesla, Inc. 's high position has slammed on the brakes, and its share price has fallen 40 per cent from a peak of $1243 to around $750. No wonder even legendary retail investor Liao Kaiyuan couldn't sit still and called on Tesla, Inc. to buy back 15 billion US dollars as soon as possible to stabilize the stock price.

Tesla, Inc. 's latest fall stems from Mr Musk's deal with Twitter.Tesla, Inc. founder and CEO Elon Musk bought a 9.2% stake in social media company Twitter, according to a filing disclosed by the Securities and Exchange Commission (SEC) on April 4. The move allows Musk to replace VANGUARD GROUP INC as Twitter's largest outside shareholder.

From that day on, Tesla, Inc. 's share price has fallen all the way. Along with the collapse were a group of growing stocks of US stocks, such as SE, TDOC, Snap Inc and so on. It turns out that these star stocks are swimming naked, and their share prices have fallen by 70% and can fall by another 80%.

So where will the share price of Tesla, Inc., the engine of the US stock bull market and the leader of technology stocks in the past two years, fall?

01

Twitter farce

Looking back on the Twitter farce that overwhelmed Tesla, Inc., there are several main points:

At the end of March, 9.2% of Musk's Twitter position was exposed, and Twitter invited him to join the board of directors.

2. Musk refused and posted a total purchase. Twitter was shocked and put forward the poison pill plan.

3. Musk responded, put forward an offer of 44 billion US dollars and began to reduce his holdings of Tesla, Inc. shares.

4. Twitter said that people are stupid and have a lot of money, so come quickly.

5. Musk stopped the acquisition on the grounds that the number of fake users exceeded 5%.

Careful netizens should be able to find that when the two sides pull each other, Musk's stock has been reduced, the money has been obtained, and Twitter has been acquired. We have to think about it again.

As the saying goes, look at a person, do not look at what he said, depends on what he has done. There is no conclusion on whether the Twitter deal will continue for the time being, but the author has some bold ideas about it (only my personal opinion).

First of all, judging from Musk's past experience, his real mergers and acquisitions are never muddled, such as SolarCity, such as battery technology company Maxwell.

Second, from the first principle, everyone knows that Musk's goal is to conquer Mars, and the acquisition of Twitter does not seem to help. Financially, Twitter is nothing more than a social platform with annual revenue of $5 billion and perennial losses.

44 billion dollars? Enough for SpaceX to launch 800 Falcon 9 rockets.

Finally, for cost-control masters like Musk, buying Twitter is not cost-effective.To save money, Musk can switch from outsourced batteries to self-research, so why did Twitter pay $44 billion for it? For Musk, a top software engineer, he himself has a huge influence, and it may be faster to develop one, such as clubhouse, which became popular last year.

Various arguments suggest that Musk's acquisition of Twitter is mostly a matter of lip service, so what is his purpose in doing so?

We might as well think the other way around, what does it take to launch a rocket? money. What's the fastest way to make money? If you reduce your stock holdings, you can get $4 billion, which has made more profits in the more than a decade since Bitzilla was founded.

Indeed, when it comes to making money, nothing is as fast as cutting leeks.

High position, reduced holdings, this routine, which is so common in Da A, is unexpectedly packaged by Musk so fresh and refined that he is indeed the man who shot his sports car into space.

02

An unintelligible valuation.

As Tesla, Inc. 's share price fell, a lot of news about the reduction of holdings also appeared one after another.

For example, Tesla, Inc., who died a lot of wood, has reduced her holdings many times this year. At present, its first heavy stock is no longer Tesla, Inc.; the British asset management giant, which has long held Tesla, Inc. 's Baillie Gifford, reduced its holdings by 987000 shares in the first quarter. Why does everyone focus on reducing their holdings of Tesla, Inc. at this time?

Maybe Tesla, Inc. is too expensive.

In fact, just three years ago, Tesla, Inc. was the target of short attacks on Wall Street. Tesla, Inc. 's share price fell 12% a day on January 18, 2019, affected by falling profits, layoffs and tight cash flow, and continued to fall for the next five months.

The market began to be bearish on Tesla, Inc.. Some people said that Musk was unreliable and smoked marijuana and was not worth trusting. Some said that Tesla, Inc. 's products would not work, Model Y would fail, and Tesla, Inc. would eventually go bankrupt.

Fortunately, Tesla, Inc. 's car sales are reliable.As the Shanghai plant went into production, the Model 3 and Model Y became popular, car deliveries rose from 368000 to 936000, and share prices began to recover, up 26-fold from the 2019 trough.

At this time, Wall Street began fancy valuations again, with some discounting cash flows to 2050 and others including the Mars business. The most dedicated person is Sister Mu, who showed a wave of Monte Carlo valuation model, took Tesla, Inc. apart in more than a dozen cases, and gave different probabilities, and finally concluded that the target price may be $7000.

From then on, Tesla, Inc. 's valuation is becoming more and more difficult for people to understand.

You can ask your friends around you. I believe few of them can clearly explain how Tesla, Inc. is valued. If you consult relevant experts, you will certainly be cast with disdain:

Don't ask, Tesla, Inc. is a software / energy / operating system / XX company, so you can't use traditional valuation.

Indeed, the stock price has risen so much that I don't shout "Tesla, Inc. is good" as if I was the fool.

03

What does the market think of Tesla, Inc.?

There is nothing wrong with this game on Wall Street when liquidity is flooded, but with the Fed's monetary tightening and the collapse of blue chip stocks such as Meta and Netflix, it seems that we really need to find out how much Tesla, Inc. is worth. Let's take a look at how the big investment banks are priced.

According to research reports from various investment banks, Tesla, Inc. 's consistent assessment price is about 1200-1300 US dollars per share. Morgan Stanley released a report called "Time to Revise Global EV Forecasts Down?" on May 13, which introduces Tesla, Inc. 's valuation model.

The report proposes that Tesla, Inc. 's target price is 1300 US dollars, and the market capitalization is mainly composed of six parts, namely:

1. Automobile sales business, 628.6 billion US dollars, and projected sales of 8.6 million vehicles in 2030

2. Self-driving fleet business, 76.5 billion US dollars, and is expected to be 500000 vehicles in 2030.

3. Third-party supply chain business, 135.4 billion dollars

4. Energy business, 114.7 billion dollars

‍5. Insurance business‍, $38.2 billion

6. Internet business, $350 billion, $25 million MAU,100 ARPU

The report is very meticulous, basically pricing all kinds of business that Tesla, Inc. can think of. Not only is the report well written, but the valuation is also bold.

In the Internet business, for example, just 25 million monthly active users, ARPU, which costs $100, gives a valuation of $350 billion, while Meta with 2 billion users is now valued at just over $500 billion.

Even with a massive valuation, Tesla, Inc. 's target price for 2030 is only $1300, double the current price and about the same as last year's high.

This form can be seen more clearly. If you invest in Tesla, Inc., you should hope that he will become a global automobile leader, step on a number of supply chain competitors such as the Ningde era, and make achievements in the Internet, energy and insurance.

In this way, it is only twice the return on investment.

The odds seem a little too low.

04

Can the business still exceed expectations?

Maybe we don't have to look too far away and look at the car sales business in the next two years.

According to Goldman Sachs Group's expectations, Tesla, Inc. will sell 1.45 million and 1.84 million vehicles in 2022 and 2023, respectively, with revenues of $87.59 billion and $114.516 billion, EBITDA of $18.359 billion and $22.615 billion, and after-tax profits of $12.884 billion and $15.83 billion, respectively.

According to the latest market capitalization, Tesla, Inc. 's price-to-earnings ratios of 22 years and 23 years are 50 times and 41 times respectively, which is not ridiculously expensive, but it is by no means cheap. Considering that revenue growth in the next two years is only 13% and 15%, there is room for a correction in valuations in the current risk appetite environment.

After looking at the valuation, let's look at the sales volume.

Sales in 2022 are expected to be 1.45 million, which is not difficult to achieve.Sales of Model 3 and Model Y have been on the rise since their launch. Last year, sales in North America totaled 350000 vehicles, and this year it has stabilized at 30, 000 and 36000 respectively in China. According to this sales volume, there is little problem in meeting the sales target.

However, we also have to consider one point: the competitive pattern.

The automobile industry is a completely competitive market with fierce competition. Generally speaking, a model will peak after a period of time on the market, and then slowly decline. Why? Because competitors will soon launch better and cheaper products, forming the advantage of backwardness, the competition of automakers will become a marathon, testing the ability of product iteration.

Judging from the product plan, there will be no major changes to Tesla, Inc. 's models on sale this year, and the new products will mainly focus on lower-priced models and Peake Cybertruck; in sharp contrast, domestic new power models will explode this year, such as BYD's Ocean Series, NIO Inc. 's ET7/ET5, the ideal L9, XPeng Inc. 's G9, Lanto, Polar Krypton and so on.

Unlike the likes of Volkswagen ID.3 and Renault Zoe in Europe and the United States, Tesla, Inc. 's competitors in China are fiercer and fiercer.

You want to continue your voyage. NIO Inc. 's ET7 reaches 1000km.

You need power, BYD Han 100 km speed up 3.9 seconds

If you want to be intelligent, ideally pile up 5 screens for you.

No blow, no black, just look at the configuration, Tesla, Inc., who is complained of being a "semifinished product house", is not at all comparable to the domestic car with inner coil and stacking materials.

I know that at this time someone is going to jump out: talk about configuration low, Tesla, Inc. 's core competitiveness, is the software, autopilot is its soul.

How many people bought Tesla, Inc. from the software? we don't have the data, but some foreign media have conducted a large-scale survey.Tesla Town Dianbao fully automatic driving (FSD) suit, the activation rate is only about 11%.So I have to ask, what's the difference between Tesla, Inc. and salted fish without autopilot?

The body is still the most honest. Does Tesla, Inc. believe in it or not? Sales will have an answer.

Overall, Tesla, Inc. 's success in the past two years lies in expanding excellent products from the United States to the world, enjoying the dividend of increased penetration of electric vehicles.

In the future, if the penetration rate is to be further improved, the dividends are getting smaller and smaller, and the competitors are acting like a wolf one by one, coupled with the tight inflationary environment, it will be more and more difficult for the performance to exceed expectations.

05

Conclusion

Without a doubt, Tesla, Inc. is a great enterprise.What I like most is the robotics business, which has the potential to reshape our entire world system in the future.You can imagine that the core competitiveness of our country is the demographic dividend and the low manufacturing cost. What if there is a robot? Comparative advantages between countries may no longer exist.

However, from the perspective of short-term stock prices, Tesla, Inc. still has no margin of safety after the collapse.

In the next few years, to keep the stock price, Tesla, Inc. needs to sell more Model 3 and Model Y, launch more new models, cope with strong competition from competitors, and then make great strides in insurance, energy and the Internet.

It may be getting harder and harder to exceed expectations.