After entering 2020, Tesla The market value of this American electric vehicle company has increased by more than 500 billion dollars. Although Tesla can't compare with the nine traditional car companies in terms of car sales, unexpectedly, the market value of this American electric vehicle company is already equal to the sum of these traditional car companies. These traditional automobile manufacturers include Volkswagen, Toyota, Nissan, Hyundai, GM, Ford, Honda Fiat Chrysler And Peugeot.
Overall, Tesla's global sales volume is expected to exceed 500000 vehicles this year, accounting for less than 1% of the total global vehicle sales. In contrast, Cox Automotive predicts that in 2020, the total sales of automobiles in the U.S. market alone will reach at least 14.3 million, lower than the average annual sales of more than 17 million in the past five years.
Warren Capital's analysis shows that at present, new energy vehicles account for about 6% of the total sales of passenger vehicles in China. In the first 11 months of 2020, the total sales of passenger vehicles in China will be 17.5 million, including about 963000 new energy vehicles. From January to the end of November, Tesla gained 12% market share in China's new energy vehicle market, second only to local automobile manufacturers BYD and SAIC. Warren Capital is a stock research institution focusing on Chinese enterprises and multinational companies in China. Its founder and CEO Li Junheng explained that buyers are very sensitive to the price of cars in the Chinese market. Therefore, for Tesla, a high-tech and high price car brand, their achievements in the Chinese market can be said to be very successful.
Moreover, Tesla is still a low floating stock, which means its price may rise further. According to FactSet, the company's insiders own just over 20% of Tesla's shares. Among them, as of September this year, Musk personally owned 18% of the company's shares.
As of September 30, 2020, institutional shareholders hold about 42% of the shares of Tesla. The top three institutional shareholders of the company are Capital Research&Management Co The Vanguard Group and Baillie Gifford. All three institutional shareholders reduced their holdings of Tesla in the third quarter of this year.
Not only will Tesla's share price rise like a rocket in 2020, but many analysts on Wall Street believe that Tesla's share price still has room for further rise after 2021. For example, Garrett Nelson, an analyst at CFRA Research, recently raised Tesla's 12-month target price by $100 to $750, and again gave a rating of "strongly recommended to buy". Prior to that, Tesla had just disclosed its plan to increase its capital by up to 5 billion dollars at the market price.
However, some other analysts have warned against Tesla's stock. They believe that Tesla's market value has soared, more from the company's technical goals and forward-looking statements, rather than based on its profit and demand for electric vehicles, vehicle services and software, as well as its solar energy and energy storage products.
Last Wednesday, J.P. Morgan analyst Ryan Brinkman wrote in a report to investors: "We do not recommend investors to combine Tesla stock with S&P Index The same treatment, because in our view, almost all conventional indicators show that Tesla's share price is not only overvalued, but also significantly overvalued. "
Last Friday, Jeffries analyst Philippe Houchois downgraded Tesla's stock rating from "buy" to "hold", but strangely, he raised its target price to $650, saying that Tesla has a "lasting competitive advantage", However, "considering the industry structure and political factors, we do not think Tesla can gain a leading position in the automotive industry".
FactSet data shows that Tesla's current enterprise value is about 180 times the company's profit before interest, tax, depreciation and amortization (EBITDA). The company's five-year average multiple is 151.8, ranging from 23.2 to 420.
In contrast, Toyota's current multiple is 12.5, and its five-year average multiple is 8.1. In July this year, Tesla surpassed Toyota in market value and became the world's largest automaker in market value. The largest automobile manufacturer in the United States general motors The current multiple is 8.7. even if it is Apple and Google And other famous technology enterprises, their multiples are also significantly lower than Tesla's, Apple's and Google's multiples are 26.7 and 23.4 respectively.
Supporters of Tesla believe that the company has subverted the traditional automobile industry, proving that pure electric vehicles can surpass traditional internal combustion engine vehicles, and forcing competitors such as General Motors to enter this field and develop their own electric vehicles. Supporters said that with Tesla's continuous expansion in the world, the company's sales and profits will continue to grow. As Tesla releases new products, such as the official version of FSD software, its own auto insurance business, Cybertruck, the next generation Roadster and other new models, the company will sell more cars and services, and obtain more new customers while retaining existing customers.
The shareholders of Tesla still firmly believe in Musk's vision and believe that he and Tesla can finally fulfill their commitments. Even if it takes longer than expected for the prototype to become a real product, they don't mind. These products include Solarglass solar roof, and of course, the most expected electric vehicle with automatic driving function.
As long as Tesla can put forward innovative ideas, they will not lack fans or capital. Even in this epidemic year, Tesla still has the ability to explore new markets, raise billions of funds to build new factories, and strive to realize its dream of producing batteries independently.
The company has made profits for five consecutive quarters. At the same time, they have recently built new factories and started production in Shanghai, and are also starting to build new factories in Texas and Berlin, Germany.
Last Thursday, Morgan Stanley Analyst Adam Jonas once called on Tess investors to "contact colleagues in the software/technology field to understand their changing business model". He said that Tesla's services accounted for $164 of its target stock price of $540.
While those who criticize Tesla believe that it is unfair that the company is classified as a technology enterprise rather than an automobile manufacturer, and its market value is also out of line with reality. The stock price is seriously overvalued. These people believe that Tesla's stock price will slowly return to normal levels.
For a long time, Tesla vehicles have quality and reliability problems, but Musk did not take responsibility for this, and Wall Street also ignored or did not hold Musk accountable. In 2020, the company launched vehicle recalls in the United States and China due to vehicle quality problems. Last month, Tesla recalled about 9500 Model X and Model Y vehicles in the United States. In October, Tesla recalled the Model S and Model X electric vehicles imported between 2013 and 2017 in China because of defects in the vehicle suspension. These problems have led to the damage of Tesla's reputation.
Tesla has never disclosed the sales data of its latest model Model Y to the public so far, so the outside world cannot judge whether the model has achieved success or how much success it has achieved, let alone whether Model Y is devouring the sales of Model 3, or whether it has led to the "infighting" of the company's two vehicles. Previously, Tesla had promised many times that its FSD autopilot system was nearing completion, but then Musk said that the FSD team had rewritten the software on a large scale this year.
Sarat Sethi, the managing partner and portfolio manager of Douglas C Lane and Associates, said that although he would not short Tesla himself, he believed that Tesla's share price would fall in the next 12 months, and he did not want to hold Tesla shares in the next three years.
He said: "They must do everything perfectly. They must become a software company. If they want to match the current market value, they need to become an omnipotent company."
J. P. Morgan's data shows that since December 2018, although analysts have simultaneously lowered their expectations for Tesla's earnings per share in 2020, 2021, 2022, 2023 and 2024, analysts have increased the 12-month target price of the stock by about 450% on average.
Insufficient cash
If it is true that "if you have money, you can do whatever you want", Tesla still needs to work hard. Compared with large automobile enterprises and technology enterprises, Tesla has far less cash. This is also why the company has sought help from the capital market three times this year, including their stock sale plan announced last Tuesday. In the future development process, Tesla is likely to continue to do so to obtain cash.
The automobile industry is an extremely money consuming industry, and almost every job requires a lot of cash, such as expanding vehicle production scale, introducing new models, and entering new market segments (for example, Tesla plans to launch Semi to enter the heavy commercial truck market).
As of the end of the third quarter, Tesla's total assets were $45.7 billion, including $14.5 billion in cash and cash equivalents. In contrast, GM's total assets amounted to $239.7 billion, including $26.9 billion in cash and cash equivalents. Apple's total assets were $317.3 billion, including more than $191.8 billion in cash and securities.
Tesla supporters believe that the company should conduct large-scale expansion in the United States and around the world to increase its business. This includes stepping up vehicle production in China, the world's largest electric vehicle market and the most important driving force for Tesla's growth. In addition, analysts believe that Tesla should also build new automobile production plants in Texas and Germany. Driven by local regulations, the popularization speed of electric vehicles in China and Europe will exceed that in the United States, so it is very important for Tesla to have factories in China and Europe. In addition, the reason why Tesla built a factory in Texas is to produce electric pickups here, which is also a segment of the market that Tesla has not yet explored.
When the company's share price rises significantly in 2020, it is a wise move to tap the capital market. Tesla needs to get more cash and continue to develop in the foreseeable future.
On Tuesday, Wedbush analyst Dan Ives said in a report that Tesla's financing was an "obvious positive factor, which further consolidated the increase of Tesla's share price".
Ives wrote in this report: "At present, Musk is raising enough funds to further stabilize its growing cash position on its balance sheet and capital structure, and slowly get rid of debt. Now, Musk's strength has significantly increased, and led the company to achieve profitability. Tesla's main factory construction is about to start (Austin and Berlin factories) , which temporarily silenced Tesla's view that had been lingering before. "
However, Tesla believes that the company has never proved that it can continue to make profits and needs to continue to use the financial market to repay debts and expand globally.
According to data from Dun&Bradstreet, as of the end of September, Tesla was one of the enterprises with the lowest scores in terms of financial pressure and commercial credit rating. This means that most of the time, the company did not pay the suppliers or did not pay on time.
In October this year, Tesla told investors that the company plans to increase its spending to 2.5 billion dollars in 2021 and 2022, especially in the construction of new factories and expansion of existing factories, including its battery cell production business. However, a large part of these expenses may be used to pay old debts, and may also pay recall, litigation and settlement costs accumulated during the development of the company.
Michael Burry, a hedge fund manager, urged Musk to issue more shares at his "ridiculous" share price in a tweet last week, which has been deleted. Previously, Bray said he was a short seller of Tesla.
Vehicle delivery
In the middle of 2020, Tesla's vehicle delivery volume has also increased, but the company's share in the total sales of cars in the United States and the world is still less than 1%.
At Tesla's 2020 shareholders' meeting and battery day activities, Musk revealed that the company's vehicle delivery this year will increase by 30% to 40% over last year, which means that its total delivery in 2020 will be between 477500 and 514500 vehicles. By contrast, as of the third quarter of this year, GM's wholesale shipments were 2.4 million, including 1.9 million in North America.
In terms of delivery, Musk has a grand plan to increase Tesla's sales from about 500000 in 2020 to 20 million annually in the next ten years.
Supporters said that Tesla accounted for three quarters of the market share in the sales of electric vehicles in the United States. Therefore, in the growing electric vehicle market, compared with traditional automobile manufacturers such as General Motors, Tesla has a first mover advantage. The company also operates its electric vehicle charging infrastructure nationwide, which is another competitive advantage of the company.
The company has attracted a large number of fanatical fans for itself through previous marketing, activities, and extensive use of social media. These Tesla fans fully trust Musk and are willing to buy Tesla's electric vehicles.
In addition, Tesla is also the originator of the OTA upgrade of the whole vehicle. This upgrade mode makes the owners feel that their cars will become better and better over time, because the OTA upgrade will enable the vehicles to obtain the latest functions, rather than being more and more backward like traditional cars. In addition, in the eyes of supporters, Tesla's technology is also ahead of other manufacturers, including traditional manufacturers such as GM, Toyota and Volkswagen, as well as Wei Lai And other enterprises with new power in car manufacturing.
last week, Goldman Sachs Analyst Mark Delaney said in an investor note that if Tesla can maintain a high share of 20% in the electric vehicle market, its annual sales are expected to reach 15 million by 2040.
However, in the opinion of the detractors, Tesla's sales and delivery only account for a small part of the overall automotive industry. As more and more automobile manufacturers enter the electric vehicle market, Tesla's market share will inevitably be diluted, and Tesla will become a niche brand again in the future. Some enterprises have challenged Tesla's dominance, especially in the European market, where Volkswagen just launched ID. 3, which was welcomed by European consumers.
In addition, Tesla is also entering some more price sensitive markets, where consumers are more picky and will not tolerate Tesla's quality and stability defects. Although Tesla has basically dominated the high-end electric vehicle market in the United States, its position will also face challenges. More and more start-ups and traditional car companies are releasing their own electric vehicles in the U.S. market. These new models compete with Tesla's vehicles in terms of quality and price. For example, GM has previously announced that it plans to invest 27 billion dollars before 2025 to vigorously develop electric vehicles and autonomous vehicles. GM said that it would release 30 new electric vehicles worldwide, including the electric version of GMC Hummer, which will be launched next year. This vehicle will be "positive" with Tesla Cybertruk in the market. In addition to GMC brand, many brands under GM, such as Cadillac, Buick and Chevrolet, will launch their own electric vehicles to compete with Tesla in the market.
Currently, Tesla has four models on sale, but the famous Consumer Report only recommends one of them. In JD Power's annual quality study released in June 2020, Tesla ranked the lowest among all 32 major auto brands it evaluated. IHS Markit estimates that the global total vehicle sales in 2024 will be about 92.3 million, of which electric vehicles will only account for 10.2%.
On Monday, Tesla shares fell 4% to close at $636.30. (Xingyun)
