another particularly vicious aspect of the current market is that consumer spending and equity valuations are closely tied together. As tech stocks fall, spending will decrease, putting even more pressure on the fundamentals of these businesses. 50%+ drops from the peak are bad enough for those who hold a given company's stock directly, but many market participants chose to borrow money in order to purchase far out of the money call options. They are getting wiped out immediately. The "loss porn" category on Twitter and Reddit is instructive here.
The gamma- and short squeeze tailwind for Tesla has faded, now they are starting to fall together with the other companies in the S&P500 - once ETFs on this index face outflows (due to inflation fears and the associated expectation of interest rate hikes for example), there will be tremendous selling pressure on Tesla.
Good read. Good to know the other side. I invested in both PTON and TSLA. Here are some of my thoughts for you to consider. In case of TSLA, I did not see any comments on how TSLA was able to exponentially increase the bottom line (not only the top-line unlike PTON). If you see the PE ratio it is decreasing exponentially and going to do the same thing in coming years with increase in both top-line and bottom-line. This will put the PE ratios somewhere between 50 to 75....which is not insane (like you try to interpret) for TSLA which is growing its top-line by 50% for next 3-5 years. If you compare with PE ratio of AMZN, TSLA multiple is reasonable especially when you keep in mind that AMZN is growing in single digits going forward with gross margins less than TSLA. These are some pointers for you to consider.
Great article, thank you! I’m a little confused on one item though. Why is Tesla overvalued at 10x but Apple isn’t? Is there a difference between the “sales multiple” for Tesla and “trailing earnings” for Apple?
another particularly vicious aspect of the current market is that consumer spending and equity valuations are closely tied together. As tech stocks fall, spending will decrease, putting even more pressure on the fundamentals of these businesses. 50%+ drops from the peak are bad enough for those who hold a given company's stock directly, but many market participants chose to borrow money in order to purchase far out of the money call options. They are getting wiped out immediately. The "loss porn" category on Twitter and Reddit is instructive here.
The gamma- and short squeeze tailwind for Tesla has faded, now they are starting to fall together with the other companies in the S&P500 - once ETFs on this index face outflows (due to inflation fears and the associated expectation of interest rate hikes for example), there will be tremendous selling pressure on Tesla.
Good read. Good to know the other side. I invested in both PTON and TSLA. Here are some of my thoughts for you to consider. In case of TSLA, I did not see any comments on how TSLA was able to exponentially increase the bottom line (not only the top-line unlike PTON). If you see the PE ratio it is decreasing exponentially and going to do the same thing in coming years with increase in both top-line and bottom-line. This will put the PE ratios somewhere between 50 to 75....which is not insane (like you try to interpret) for TSLA which is growing its top-line by 50% for next 3-5 years. If you compare with PE ratio of AMZN, TSLA multiple is reasonable especially when you keep in mind that AMZN is growing in single digits going forward with gross margins less than TSLA. These are some pointers for you to consider.
Great article, thank you! I’m a little confused on one item though. Why is Tesla overvalued at 10x but Apple isn’t? Is there a difference between the “sales multiple” for Tesla and “trailing earnings” for Apple?
very nice explanation of current environment. I am so glad that I found your report