1. There are three reasons for Tesla’s decline:
1. From the perspective of the overall U.S. stock market, Technology stocks in 22 years The overall correction:
As can be seen from the above picture, Tesla’s technology stocks fell by more than 60% On the falling list, even the top 10 can't be ranked. As can be seen in the figure below, Amazon and NVIDA also fell by more than 40%.
The correction of the technology sector is due to the fact that the epidemic has risen too much in the past two years and the valuation is too high. But when it comes to stock , it is still based on future growth and profitability to see whether the valuation is reasonable and whether to buy it. However, this also reflects the fact that Tesla is no longer a model growth stock, compared with the 19% decline in Apple this year.
2. With the rise of electric vehicle penetration rate and the continuous increase of Tesla's sales, everyone has certain uncertainties about whether Tesla can continue to grow at a high speed in the future.
Recently, Tesla's market news has shifted from the supply shortage that has lasted for many years to the beginning of a price war. Even, according to previous Reuters news, Tesla’s Shanghai factory may cut 20% of its production capacity in December. Although Tesla subsequently denied it, the news caused the stock price to fall by 6.37%.
In the middle of this year, according to Troy Teslike's analysis report, as of the end of July, Tesla's order backlog was 504,000 vehicles, which has been scheduled to 2023. By the end of September, the backlog of orders had dropped sharply to 317,000 vehicles.
Although Tesla’s sales in the Chinese market still achieved double-digit growth in November, it is also facing increasingly fierce competition, and the production capacity of Tesla’s super factory is accelerating.
On the other hand, the overall supply and demand relationship for electric vehicles also appears to be shifting. In the past two years, the penetration rate of electric vehicles has skyrocketed, far exceeding previous expectations. However, since October this year, the penetration rate has been somewhat stagnant.
According to the data from the Passenger Passenger Association, the penetration rate of electric vehicles in the Chinese market will be 5.8% in 2020, 14.8% in 2021, and will exceed 30% in one fell swoop by 2022. However, in October this year, although it was still as high as 30.2%, decreased by about 1.67% compared to .
Some analysts pointed out that the penetration rate of electric vehicles has increased significantly in this round, and the demand for operations such as online car-hailing and bus rental accounts for a relatively high proportion, but the growth space of this market is limited. On the other hand, the efforts that electric vehicle manufacturers can make have also reached a peak. Since the beginning of this year, many brands have been pressured by rising raw materials and have to announce price increases.
On the whole, the decline in market demand will be the biggest pressure on Tesla's stock price in the future.
3. Twitter-related concerns:
Musk is selling more of Tesla’s stock to maintain Twitter’s annual burn rate (burn rate) is about $2-3 billion, but should be very It will be optimized soon. Twitter should also be able to raise another $3 billion. But for Tesla's market value and stock trading volume, this amount of funds is not worth mentioning.
Another concern related to Twitter is the brand. The current Twitter news and public opinion is causing damage to Tesla’s brand, but it does not affect the network’s favorability. It may only be temporary, and it is unlikely to affect diehard fans. They are the real buyers of Tesla.
There are also concerns that Musk is being distracted by Twitter. This simultaneously operates and incentivizes Tesla, SpaceX, Boring Company, Neuralink and OpenAI (now gone) people, can be distracted by Twitter?
2. Can buy the bottom? Whether
can buy the bottom depends on the judgment of Tesla’s reasonable stock price. Many people doubt that Tesla’s market value of hundreds of billions or trillions of dollars is likely to return in the future. After all, the peak market value of traditional cars such as , Toyota, and is more than 200 billion. After Tesla fell, its market value was still above 500 billion.
Tesla delivered about 500,000 vehicles in the latest quarter, and the current sales volume is about 2 million vehicles per year, with an average price of around US$50,000. The sales ceiling of a multi-brand car company is 10 million vehicles per year, and the average price is 30,000 US dollars. And for brands with an average price of 50,000 US dollars like Mercedes-Benz, , BMW, its sales ceiling is 2-3 million vehicles per year. We think this is a very reasonable logic, and electric vehicles cannot break it. So if you want to break through to 10 million vehicles per year, Tesla's average price may have to drop to around $30,000.
But it should be pointed out that Tesla’s logic is not simply to build cars, it can also sell software and self-driving cars, so we can’t just look at Tesla with the valuation logic of car companies. Looking at services together; at the same time, BYD and other new energy vehicle companies are still growing. Fast-growing enterprises become stable-growing enterprises.
assumes that the annual growth rate of Tesla's sales in the next five years will be 50%, which is also a flag set by Musk himself, and the growth rate of 50% must be maintained for a long time (44% in the latest quarter). Then by 2027, the sales volume will reach about 10 million, which will reach the ceiling share we mentioned earlier. To achieve this share, the average price must drop, which is normally $30,000, and we assume Tesla is $35,000.
In addition, Tesla is a car that can sell software, so we also count the penetration rate of autonomous driving. According to previous estimates, the current global rate may be 5%, assuming that FSD will reach a penetration rate of 15% in five years, which is 15% of 10 million vehicles a year, that is, 1.5 million FSD, and then multiplied by the software price.
Let's look at profits again. In terms of automobiles, the gross profit may drop a little after the average price falls, but we still assume that it is higher than the 18%-20% gross profit of traditional automakers; the gross profit of software will be very high, more than 70%. Taken together, Tesla may maintain today's comprehensive gross profit rate of 26%-27% in five years' time. In this way, adding 9% operating costs , and the corresponding tax rate, the estimated net profit of Tesla in 2027 is about 50 billion US dollars, and the corresponding net profit rate is 14%, which is higher than the industry.
followed by PE, considering the software and the possibility of future growth, we give a PE that is 50% higher than the industry - 15 times, corresponding to Tesla's market value in 2027 may be more than 700 billion, converted into a stock price of 250 dollars. If calculated according to the 10% discount rate , it corresponds to a stock price of more than 150 US dollars today. Although
is based on this valuation, the current stock price is not cheap. But the history of countless growth stocks has proved that if Tesla can maintain a growth rate of 50% in the past five years, then it is no problem to maintain a price-earnings ratio of 40-50 times during the growth process. Of course, after the end of high growth, it will gradually Return to the normal price-earnings ratio of 15-20 times. Therefore, is calculated based on 2023 EPS (earnings per share) of US$7.76. The current price-to-earnings ratio is 22 times, and there is still a lot of room for growth from the 50-times price-earnings ratio. Of course, the premise is that Tesla will continue to maintain a high growth rate in the next 5 years.
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