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0 Views· 29 June 2022

Time To SELL TSLA? A Simple Explanation For Tesla's Valuation



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In this video, I cover my valuation model on Tesla stock using a simple bull, base, and bear case methodology.

Disclaimer: I am not a financial advisor and any information in this video is for entertainment purposes only. Always do your own research. I am a shareholder of Tesla (TSLA) and this is simply my opinion on Tesla stock.

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Over the past few months, there’s been a lot of fear, uncertainty, and doubt surrounding Tesla stock. People on all types of social media platforms are selling Tesla stock and bearish coverage on Tesla has garnered substantial attention lately. On the flip side, many say that Tesla stock will reach monstrous highs without much calculation behind those kinds of price targets. On both sides of the debate, there is a lot of misinformation, with the majority of the misinformation coming from the bearish side. For example, this video, which has blown up recently and has over 2.4 million views, claimed that Tesla obtains lithium from young children overseas in order to criticize Tesla’s ethics. However, the truth was that the picture shown in the article was from a cobalt mine in Congo that Tesla does not directly source cobalt from and indirectly obtains cobalt only from qualified refiners. In this video, I’ll cover the simple truth about the value of Tesla stock and dispel any myths about Tesla along the way. Full disclaimer, as many of you already know, I am a long-term Tesla shareholder, but I am extremely conservative with my numbers in comparison to other bulls as you’ll soon see. Welcome to Casgains Academy. If you’re new to the channel, please consider subscribing for more content like this, and let’s get right into it.
Tesla has multiple revenue streams that are all in different sectors, so it’s difficult to project and calculate the value of Tesla stock. However, by dissecting each revenue stream one by one, we can get a relatively accurate estimate of the future of Tesla. Over the past few weeks, there have been so many investors focusing on the short term, with reports coming in about Tesla’s delivery numbers for certain months in China day after day. These types of concerns are not only unnecessary but also detrimental for those who are interested in looking at the bigger picture. In fact, when talking about how some investors were underwhelmed by Tesla’s Battery Day, Elon Musk said: “Sell your stock, I don’t care.” Lately, many investors have also been capitulating, which manifests how those investors did not do enough research prior to investing in Tesla stock and other assets that they sold. This image perfectly demonstrates how in the short term, the market acts on how the majority perceives a stock. If almost all speculators are greedy, then the stock price may be peaking in the short term. On the contrary, if almost all speculators are fearful, then the stock price will likely go up in the short term. For the following calculation, I will be projecting a bull, base, and bear case scenario, mainly because there are many uncertainties in the stock market and the economy at large. There are three main revenue drivers for Tesla: automobile deliveries, energy, and potentially insurance. Note that there are other sources of revenue for Tesla, such as regulatory credits and trading cryptocurrencies. On a side note, there’s been a lot of misinformation surrounding regulatory credits where some say that Tesla’s profit comes from the government. The majority of regulatory credit revenue does not come from the government. It comes from other automakers that pay Tesla in order to help them meet carbon emission requirements. Nevertheless, I left regulatory credits out of the following calculations because those are one-time payments that will likely decrease in the future. This spreadsheet shows the bull case scenario for Tesla, where Tesla hits its goal to deliver 1 million vehicles in 2021, which was leaked in a meeting with Tesla’s workers. After that, I projected vehicle delivery growth of 60% in 2022, 50% in 2023, 2024, 2025, and 35% growth in 2026. The first catalysts for these deliveries include GigaShanghai’s production ramp-up, the opening of GigaBerlin and GigaTexas along with the ramp-up of the Cybertruck, Semi, and Roadster.

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