TSLA stock

11 Jul: Tesla, Inc. (TSLA) stock is the definition of a financial bubble

Tesla (TSLA) stock made a new 52-week and closed above the $1,500 for the first time ever

Investing in stocks, choosing stocks to buy, stocks to sell is not an easy task. Speculators ignore the fundamentals of stocks and buy or sell stocks only to profit from short-term price movements. This is the game of the stock market. Tesla (TSLA) stock on Friday, July 10, 2020, made a new 52-week high and closed at 1,544.65,+150.37 (+10.78%).

Why I believe Tesla (TSLA) stock is extremely overvalued and a financial bubble

Two reasons:

1.Net income

2. Free cash flows

After 10 years of going public Tesla (TSLA) struggles to make a profit. And yet some Wall street analysts increase their price target on Tesla. For the years 2019, 2018, 2017 and 2016 the net income (in thousands) for Tesla was -862,000, -976,091 ,-1,961,400, and -674,914 respectively.

The free cash flows (in thousands) for the same years were 968,000, -221,714, -4,142,008 and -1,564,300 respectively. Turning to the quarterly numbers for the free cash flows, the figures for the last 4 quarters were -921,000, 976,000, ,346,400 and 590,399.

Stock market data: Yahoo Finance

The market is pushing Tesla stock higher on hopes and expectations of an inclusion soon in the S&P 500 based on profitability for the last 4 quarters. Even if this is the case the valuation of Tesla stock to my financial analysis does not justify this stock price, and is too overvalued. The catalyst that Tesla will be a dominant player in the electric cars is not credible as competition is too intense from other car manufacturers. For now speculators drive the Tesla stock much higher. But even if the stock is included in the S&P 500, after such a big stock rally, who will drive the stock price higher?

I do not own or have sold any shares of Tesla, but this stock has moved too fast and too high without any solid fundamental reason.

14 Jun: TSLA stock price performance for the week ending on June 12, 2020

TSLA stock price

TSLA stock closed at 935.28-37.56 (-3.86%) on Friday June 12,2 2020. For the week ending on June 12, 202o TSLA stock had a performance of +5.60%. Shares of Tesla, Inc. (NASDAQ:TSLA) made a new 52-week the previous week. Tesla stock has a 52-week range of 211.00 – 1,027.48. Tesla stock has a Beta (5Y Monthly) of 1.17, and a PE Ratio (TTM) N/A. Tesla has a market capitalization of 173.471 Billion as of June 12, 2020.

Stock market data: Yahoo Finance, MarketWatch

TSLA stock chart

TSLA stock chart
TSLA stock chart

Source: Stockscharts.com

Tesla stock news

“Tesla stock gets two downgrades, falls below $1,000.Tesla Inc. stock lost some of its luster Friday after Goldman Sachs and Morgan Stanley moved to downgrade the shares, saying there are risks investors might have ignored as they rewarded the company with a dizzying valuation.

Tesla TSLA, -3.86% shares fell on Friday but garnered a weekly gain of 5.6%. The shares closed at a record $1,025.05 on Wednesday.”

Source: https://www.marketwatch.com/story/tesla-stock-gets-two-downgrades-falls-below-1000-2020-06-12