*Disclaimer, multi-year $TSLA shareholder.
As if it were not obvious!
Tesla has been losing money on their core business - making cars - until 2020. In 2020, it’s still not obvious if Tesla lost money or made very little money on their core business due to the way Tesla accounts for the sale of their regulatory carbon credits. But either way, Tesla made $1.58 billion from the sale of the regulatory carbon credits but showed only $721 billion in net profit (into which the proceeds from the regulatory credits contributed).
Yes, Tesla has been expanding their manufacturing facilities very fast and has been pouring billions of dollars into the expansion. Some of those expenses are paid from the proceeds from the sale of the regulatory carbon credits. Some of those expenses are paid from the newly raised capital based on the $800 billion market capitalization. Even if we excluded the expenses paid for building the new factories in China and Germany, and if we excluded the proceeds from the sale of regulatory carbon credits, the net profit margin for 2020 is minuscule: around 1% best case scenario. I’m not the one saying it. Musk said it on December 13, 2020.
TSLA stock price is a hype. 1/10 of the current Tesla market cap would be a very generous market cap for a company that in 2020 barely turned a net profit (if it actually did!) for the first time in its existence. The real value of TSLA is between $40 and $60 per share for the market cap between $40 and $60 billion.
For comparison, Kia made 2.5 million cars in 2020, with the net profit margin of about 4.5% while its market cap at the end of 2020 was about $21 billion. Tesla made 500,000 vehicles in 2020, had a profit margin of 1% (if that!), was named the worst quality vehicle by JD Power, and has a market cap of $830 billion.
So, Kia is 4.5 times as profitable as Tesla, makes 5 times as many vehicles as Tesla, has been named the best quality car manufacturer in the world by JD Power for several years in a row now, but has a market cap of barely 2.5% of Tesla’s market cap.
By the end of this year, Kia and Hyundai will be a force to recon with in the EV segment and will take the EV market share from Tesla in both Europe and North America. VW will also take market share from Tesla in 2021. Staring with 2022, Tesla will be bleeding its market share to a dozen EV manufacturers in the world. And then in 2024 Apple will come with its epic move and become the dominant force in the premium self-driving EV market.
2020 will be remembered as a tremendous wealth generator for Tesla shareholders. 2021 wil be remembered as the year of TSLA deflating to its real market value, which is about 7.5% of its current value.