Update, July 3, 2017
Description:
Tesla, Inc. is in the business of manufacturing and selling electric vehicles, solar panels and energy storage solutions in the United States. It is based in Palo Alto, California.
Valuation:
Since we last visited with Tesla on February 23, 2017, the stock has advanced another $100 and now sits at $361.61.
Now, there are obviously reasons for this price – bullish analysts tend to focus on the future for electric vehicles and that the potential market for EV:s is immense – but if you are looking at the current value that you are getting for those $362, it is not much at all.
In fact, I would say that you getting nothing at all.
Balance sheet:
The company has a Debt to equity ratio of 2.83 which is exceedingly high.
I would not touch such a risky asset even with a ten foot pole.
Having said that, Tesla’s Working capital is $434 million which seems reasonable but the ratio between the Working capital and the Operating expenses is only 0.2 which is very risky.
What it means is that the company needs to raise Cash sometime during the year.
Free cash flow and dividend:
Tesla does not have a positive Free Cash Flow and it goes without saying that it does not pay any dividend.
Conclusion:
There may be a great future ahead of Tesla, but the stock is not for me.
Thursday, February 23, 2017
The reason for this is that I’ve recently been watching a Youtube channel called Now You Know that show a lot of news about Tesla Motors.
So I thought that I should look into the hype and see for myself if there was anything to it.
What I did was that I went to Tesla’s website and I downloaded their financial reports.
The numbers are shocking.
Tesla has been in business for almost ten years and in none of those they have made any money.
Granted, the loss last year was less than the year before, but still the second largest loss out of these ten years.
Looking at the balance sheet it’s very much the same story.
Its total debt is a staggering 16.8 billion dollars and the free cash flow is a negative 1.4 billion.
No wonder that the stock is losing more than 5 percent as I write this.
Who in their right mind would want to invest in something like that?
It’s clear that if you buy Tesla stock you hope that the earnings will materialize in the future.
At $259 those hopes are very expensive.
Elon Musk may be an excellent visionary, but his abilities as a CEO of Tesla Motors are not as good.
If you would like to learn more about fundamental analysis you can do that here.
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