With Tesla stock going up hundreds of percent over the past few months, we're left with a question that constantly comes up. Is Tesla Stock Overvalued? In this video, I determine the fair value for Tesla stock by using the price to sales ratio.
Calculate your fair value of Tesla stock using this google spreadsheet: https://docs.google.com/spreadsheets/d/1tLvToFGZh83BzhcXxk64lj-eDxWmh_WKL5A1mdACvDk/edit?usp=sharing
Go to 4:35 for details on how to use this spreadsheet

With tussle, stop going up hundred percent over the past few months or left, the looming question is toss a stock overvalued. Is it a bubble or is the next Amazon in order to evaluate whether tussle stock is overvalued? We're going to use valuation ratios such as PE and PS. However, we don't have enough data about castles earnings and the company hasn't reached a point where they're going to turn on the switch for a maximize profitability. So it would not be accurate for us to use the price to earnings ratio in this analysis.

As a result, we're left with the price to sales ratio, a common metric used for growth stocks like Amazon and Tesla at the time that I'm recording this video. That's the stock has a price to sales ratio of six point: seven. Six. On the other hand, Amazon stock has a price to sales ratio of three point.

Seven two already off the bat tossin stock has a higher price to sales ratio, but Tesla is expected to a fashion Amazon. So it's not a fair comparison. In two years, Towson will likely be in a similar situation to Amazon's valuation right now with the ramp. Up of the model, why, in 2020, it's fairly reasonable to expect high revenue growth rates for tussle Elon Musk has one set at the model.

I was on more vehicles than the model three as an ex combined. However, given the fact that musk does put our ambitious estimate, we're gon na estimate a revenue growth rate of 35 percent, this is reasonable, in fact, a little conservative as not only as the model I going to be released, but also possibly the Roadster and semi, which Should start selling by the end of 2020 in order to calculate the price to sales ratio, we need to take the total number of shares outstanding, multiply it by the stock price and then divide this result by the total revenue. Last year's revenue for tossa was twenty. Four point: five billion dollars: you can multiply this by one point: three: five: to get an estimate for Tasos revenue in 2020.

By doing this, we get an estimate of thirty three point: zero, seven billion dollars there occur only one hundred. Eighty four point: four million shares outstanding using the prices sales formula. We end up with an estimate for tussles prices: sales ratio by the end of 2020 of five point: zero: two. This is still relatively high, but you're looking at a horizon many years, past 2020.

In 2021, it is fair to expect growth of 35 % again due to the ramp up of the Roadster semi and Cybertron. Multiplying the revenue by 1.35 again and solving for the price to sales ratio gives us a PS ratio of 3.7. This number should sound familiar. This is exactly the same as Amazon's current price to sales ratio.

This allows us to conclude that the current price of Tasha stock, two years of 35 % growth year over year, are ready pricing. If you assume that Amazon's current valuation is fair for Tesla in two years, however, assuming that Amazon's valuation is fair for tossa in two years is a big assumption. In my opinion, Amazon's current valuation will be fair for Tulsa in three to four years. When Tesla's growth starts to slow down in the year of 2022, tussles looking to expand into a cheaper vehicle and with the further ramp up of the Sabo truck and expansion in Tata solar, along with tussles batteries, this will lead to, in my opinion, revenue growth of At least 35 %, but for the sake of having conservative estimates, we're gon na stick to 35 % revenue growth and note that we have already seen 500,000 reservations in the Cybertron which signals loss of man for the pickup truck.
If we calculate the price to sales ratio of pertussis talk with 35 % revenue growth, we'll get a price and sales ratio of 2.75 assuming the stock price is still $ 900. In order to reach a same valuation of Amazon stock, the stock price would have to be 1215 dollars if we go even further a long term assuming 35 % revenue go throughout the rollout of the autonomous drive network in 2023 and the ramp up of an affordable Tesla then we reach a price to sales ratio of 2.0 for for the stock price of 900. At this point, a stock price of 900 would be a steal, so we need to convert to Amazon stocks valuation and using that we obtain a stock price of one thousand six hundred forty dollars. These are conservative estimates, but it's important to be conservative when dealing with estimates such as these.

This demonstrates that if you want to buy custom stock because you believe in the one-year or two-year vision, you should not buy the stock it's overvalued. But if you believe in long-term vision, multiple years out, thousands current share price could seem fairly bad to you. If you have a bullish vision on tosses future, I left a link down below for you to use the spreadsheet, so you guys can use the prices sales ratio to estimate your fair value and castle. I was counseling.

The fair value of total stock varies between different opinions in order to utilize a spreadsheet go to file on the top left and press make a copy, make your own copy and then change the values of the estimated growth I formulated it so that the growth rate Can change you over year and using that you can calculate your fair value on Tesla based off of Amazon's valuation, so go check out that spreadsheet and then link below to calculate your fair value on Tesla. If you guys enjoyed this video, please hit that like button and subscribe, and I hope to see you in another video.

By Stock Chat

where the coffee is hot and so is the chat

18 thoughts on “Is tesla stock overvalued? | determining a fair value on tesla stock”
  1. Avataaar/Circle Created with python_avatars metriczeppelin says:

    You suggest a stock price of $1640.00 in a few years and David Lee says $2700.00. I appreciate your conservative math but it's only an estimate as is David's. Let's hope.

  2. Avataaar/Circle Created with python_avatars Quivver77 says:

    Samuel Jackson Voice – Yes TESLA is overvalued, and its going straight to HELL!

    but on a serious note, of course it overvalued. Look at competing car companies which sell more volume and their p/e. Tesla stock should be in the $150-200 range. Massive corrections are coming in the next 12 months given macro conditions. God help the longs, because the shorts will start circling once the market gets into the bear grip.

  3. Avataaar/Circle Created with python_avatars Oskar Ege says:

    The markets hasn’t accounted for the risk of the coronavirus has on Tesla’s supply chain. Q1 will show some large negative cash flows and it’s more and more likely that Q2 will as well. This is temporary but will definitely put a huge dent in the stock price. It’s possible most of what is to come during the battery day is already accounted for so even that might not be enough to keep us at these levels once new revenue guidances are presented.

  4. Avataaar/Circle Created with python_avatars Bruno Smith says:

    While it's easy to see the PRICE of Tesla stock, it's very difficult to determine its VALUE. The price will continue to see-saw for the foreseeable future, because many investors have short-term views and are more keen to leverage the stock for short-term trading gains, (though some are losing big time too – betting the wrong way).
    Much depends on how one views Tesla's (Musk's) vision and objectives, and how they handle threats (such as the coronavirus currently affecting China). If you believe that Musk's vision is solid, then the value will be high. If not, your perception of how it is currently PRICED may be different.

  5. Avataaar/Circle Created with python_avatars S Kim says:

    Great video!

  6. Avataaar/Circle Created with python_avatars tony monastiere says:

    Stay tuned, this train is going to be the ride of all rides. If you're not on board…you'll be telling
    your grandchildren, I had a chance to buy the stock, but I sat on the sidelines. Yeah, they're going
    to love you for that bonehead move!!! When Tesla becomes part of the S&P 500, watch the pricing
    soar. Funds from everywhere will buy in…then Tesla will look like amazon & google combined pricing.

  7. Avataaar/Circle Created with python_avatars warntheidiotmasses says:

    Price to sales? How about free cash flow to equity? And why for 5 years did the stock do nothing? And why the steady flow of cheerleaders on TV? And where is Henry Marcopolous?

  8. Avataaar/Circle Created with python_avatars Narek Tsaturyan says:

    Who the hell is buying shares at 900+ ..?

  9. Avataaar/Circle Created with python_avatars DerMeister812 says:

    I was surprised the P/S ratio was under 7 to be honest.
    Disclaimer: Long with a 5-10 year outlook.

  10. Avataaar/Circle Created with python_avatars C Kemper says:

    Tesla is guiding to 50% revenue growth YOY on the most recent earnings call. 35% is to conservative IMHO

  11. Avataaar/Circle Created with python_avatars Urgelt says:

    Nobody knows how to value Tesla. There is risk. There is uncertainty. We can hardly begin to guess what this company will look like in 5 years, or 10, or 20. The result is volatility.

    Every change in the stock price is a symptom of volatility.

    Overall, so long as Tesla maintains its obvious tech lead and grows, its value will tend to go up. But absent a clear reading of the end-state, the point at which Tesla will reduce growth and start to pay dividends, its valuation will be uncertain and subject to wide fluctuations.

    Is the stock price in a bubble right now? I'm going to say 'yes.' In the short term, there is considerable downside risk. I don't think it can hold onto a $900 stock price. Why? Because of COVID-19. We're going to see supply chain disruptions, factory closings, and even deaths among key personnel.

    Tesla won't be alone in this. We might even argue that it will hold its valuation better than some other companies, since it has more than the usual amount of vertical integration. Nevertheless, a pandemic is developing, and it will plunge the world into a recession and manufacturing difficulties. Supply chains will break, and demand will falter. Tesla won't escape from this unscathed. I don't think any company will.

    It might take a couple of years for a recession to end. Much is uncertain about that, too. But I do expect Tesla's stock price to fall, probably precipitously, before it resumes its long slog upward.

  12. Avataaar/Circle Created with python_avatars Edgar Arenas says:

    Google = Search
    Amazon = Shopping
    Facebook = Social
    Microsoft = Software
    Netflix = Streaming
    Tesla = Sustainable Transport, Self drive, Solar, Storage, Space.

  13. Avataaar/Circle Created with python_avatars Benny Gbutter says:

    Always making solid conclusions based on long term analysts put in a way that laymen like me can easily digest. Much appreciated

  14. Avataaar/Circle Created with python_avatars dsgregg says:

    So from the video as I understand it, the current share price is very high and won't reflect a fair valuation for two years?

  15. Avataaar/Circle Created with python_avatars Ron M says:

    Overvalued… NO WAY DUDE! PT IS 70 million!!!! That means its basicly for free now.

  16. Avataaar/Circle Created with python_avatars titaniumsandwedge says:

    LOL! Trying to apply traditional valuation metrics to TSLA is totally foolish. The stock is trading like a cult stock. Leave it at that. Can the cult continue? Sure!

  17. Avataaar/Circle Created with python_avatars japrogramer says:

    TSLA about to pass 1000$ $____$ earnings on April

  18. Avataaar/Circle Created with python_avatars MyPetEskimo says:

    All those people who bought cyber preorders
    Most likely have shares and in 2 years they would have enough to cover the cost of the truck

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