Tesla Valuation
ARK is a ETF that invests in disruptive technology stocks. It has not done well recently, down ~50% as the market adjusts. Disclaimer I don’t own Tesla and I don’t have any money in ARK’s fund.
ARK Investments released an open source valuation model for Tesla. I think that’s great. It allows people to inspect the thinking, critique, and potentially improve their model. I’m looking forward to inspecting it in more detail but some very obvious things leap of the front page.
Some of the assumptions in the model are fantastical. They call out Tesla’s robotaxi business as a key driver contibuting 60% of expected value by 2026, and $51B in revenue. And that’s the bear case! We’re midway through 2022 and there is no robotaxi business today. Unless tesla where to solve L5 autonomous driving, and roll out robotaxis ignoring regulatory barriers, this bear case is just not going to happen.
Today the worlds largest auto maker by units is Toyota with 10.5M units in 2021. ARK’s bear case for units sold is 10M in 2026. Global auto sales in 2021 where ~67M units. The bear case is to capture ~15% of global auto sales becoming the worlds global #1 OEM in four years (10x existing units sold). This is highly unlikely when many of the OEMs are now ramping up and selling very high quality EV’s e.g. Kia EV6, Hyundai Iconic 5, Mercedes EQ, Porsche Taycan etc.
The other elephant in the room is the CEO who is an erratic man-child but it’s hard to financially model that.
Long and short my opinion is unless you are long term invested in Tesla already, stay well clear. Also, don’t believe ARK. Looking forward to diving in a bit deeper.
End of Year Update
When I wrote this post Tesla was at $335 per share. Since then he gone and bought twitter and I think many others have woke (pun intended) up and realized that Elon is no business genius. The current share price is $123. It’s down 66% this year.
Cathy’s ETF is also in the toilet and she is still pumping bitcoin and thinks it can hit $1M by 2030.