Tesla Valuation since IPO

TSLA was trading over 20X's sales in 2021 and 2022 and was "way ahead" of itself in valuation. The cart was before the horse. First is expectations, then reality comes next. Growth and momentum gets investors excited and they pay UP for potential. With stocks, it isn't a "weighing game" at the beginning because the sellers are holders who don't want to sell because either they don't want to pay taxes or they don't want to lose control of their ownership position OR it is illegal to sell for lock-up reasons.

So, in the short run, buyers can push a stock UP to levels that are unreasonable, illogical and unsustainable. But what happens is people SEE stocks trade at certain valuations without regard to the reality of the weakness of sellers as end up assuming that all stock prices are fair. We tend to believe this reality but it is a temporary reality.

Elon Musk cleverly and smartly took advantage of the 'fully priced' TSLA shares and bought Twitter with that money (and paid a fortune in capital gains taxes). Was he wrong to do that? I don't think so. We need free speech and Jack was just a pawn of the Government along with the rest of the social and media moguls.

Here is the valuation graph of TSLA for you to review. I posted my valuation comments over the years here live on this site. Check them out.

The third box down is the PSR or Price-to-Sales-Ratio which shows the value of the company as a multiple of the 12 month trailing revenues. Valuing a company based on its revenues alone is a great starting point and great books have been written about it, especially by Kenneth L Fisher.

I have used PSR successfully for my whole career both as a measure to find cheap stocks and also as a tool to exit expensive stocks.

Look for my other charts I have posted here on Tesla over the years since the IPO.

Tim

11:06AM EST 11/27/2023 TSLA 233.90 last, -1.55

Comment:

I didn't mention that I haven't touched the comments on the chart since 2022.