Will Tesla Stock Price Crash?I am a huge Elon Musk fan and believe Tesla will likely become the next Apple or Amazon. However, at its current valuation, a 50%+ collapse in the stock price seems inevitable.
Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
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.