TESLA DAILY CHART
The trend in TSLA is overbought. The MACD and the RSI (14) are diverging negatively, suggesting waning momentum. The stock is behaving like a commodity – not a business. I see the potential for a “buy the rumor sell the news” event after the stock splits. I think prices will correct at least 50%, and that is extremely conservative.
Another way to measure Tesla’s ludicrous valuation is through total revenue – let me explain. Hypothetically speaking, let’s say a company paid 100% of its annual revenue to shareholders as a dividend. Of course, this is not possible, but it helps make my point. In the example below, we will measure how many calendar days it would take to recover your initial investment if each company paid 100% of their profits to shareholders at today’s stock price.
Time to recover initial investments:
Ford Motor Company (F) $6.66
Revenue 130.4 billion
Revenue Per Share $32.87
Time to recover initial investment 74-days
General Motors (GM) $28.56
Revenue 115.79 billion
Revenue Per Share $80.94
Time to recover initial investment 128-days
Walmart (WMT) $131.65
Revenue 534.66 billion
Revenue Per Share $188.23
Time to recover initial investment 255-days
Tesla (TSLA) $2042.41
Revenue 25.72 billion
Revenue Per Share $141.64
Time to recover initial investment 5263-days or over 14-years.
Lastly, the combined market cap of Ford, GM, and Fiat Chrysler (the big three) is 90-billion, and in 2019 they produced 7,470,370 vehicles. Tesla’s market cap is 300% greater than all three (307 billion), and they delivered only 195,000 vehicles – ASTONISHING.
What goes up – must come down. Will Tesla prices crash soon? Maybe – it is hard to say. Whatever the case, I think we will get a generational buying opportunity in TSLA next year or early 2022.
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.