Tesla · Fortune Technology
Morgan analyst Ryan Brinkman issued a report on Tesla the likes of which Wall Street has seldom
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Based on where its fading financials will land by the end of this year, he says it’s worth $145, and hence eventually headed for a drop of 60%.
Key facts
- At his $145 share price, Tesla’s market cap would drop from the current $1.3 trillion to under $500 billion
- Its price/earnings ratio would be way below today’s number of around 200, but still sit at a towering 77 ($500 billion market cap divided by $6.5 billion in net profits)
- To justify what investors paid, at a 10% annual return, it would need to re-reach the $1 trillion market cap threshold in seven years, and earn something like $40 billion a year
- Today, the Wall Street analyst consensus reckons Tesla’s still cheap and that its shares will rise 15% from here to $416 over the next 12 months
Summary
On Monday, J.P. Morgan analyst Ryan Brinkman issued a report on Tesla the likes of which Wall Street has seldom if ever seen. For years, this writer has been arguing that Tesla owes its gigantic valuation—today standing at $1.3 trillion—almost entirely from the “Elon Musk magic premium,” created when his long-term fans buy into promises of fabulously profitable futuristic products that Musk and Tesla so far have failed to commercialize. That’s pretty much what Brinkman concludes as well, and to characterize his position as “contrarian” is an understatement. In June 2022, Brinkman points out, when the consensus forecast for its car sales reached its peak, the analyst community projected that unit deliveries would reach 1.366 million by the opening quarter of this year.