Tesla's stock has long been overpriced, and that's distorted the company's triumphs.
The white flag of surrender, or at least a fighting retreat, is being run up all over Wall Street.
I've been saying this for years, but the idea that Tesla is worth more than, at most, $150 per share is sort of silly. This is a relatively small carmaker. It sold 250,000 vehicles last year. It could have margins that align with Porsche or BMW . But for now it has managed three profitable quarters since it went public in 2010; General Motors sold nearly 3 million vehicles in the US alone and has made tens of billions on profits since its own 2010 IPO.
Don't worry about China, don't worry about the Model Y. Just look at the established business and figure out what Tesla is worth based on that. The figure of $150 per share doesn't seem, to me, too crazy. Obviously, that's $100 lower than where Tesla has raised money in the past, but it would behoove Tesla to get off the Wall-Street-is-my-ATM train and operate without that backstopping.
Tesla's success, against the odds, is really its main challenge at this point. Ford and GM, not to mention Toyota and Honda, built up their businesses with 20th-century cost structures. Ford has factories — still cranking out vehicles — that it built in the 1920s. Tesla has to contend with 21st-century prices, as well as 20th-century technologies, while the entire worldwide auto industry rose on engineering that was developed in the 1890s.
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