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Nevermind about what is valuation worry about how today's market is going to be. I think we are likely going to see the market puke today and with it, stocks like Tesla will be eadling the charge down. For the very reason this article has spelled out. Over-value, shrinking revenue and profits. And especially, Musk being tettered to a very unstable Godfather......

Tesla: Once Again, It's Time To Trim

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{"i18n":{"language":"en_US"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":399426787349136,"tweetId":"399426787349136","gmtCreate":1738541794537,"gmtModify":1738542112978,"author":{"id":3576140222331577,"idStr":"3576140222331577","authorId":3576140222331577,"authorIdStr":"3576140222331577","name":"Guavaxf30","avatar":"https://static.tigerbbs.com/1ff15ff6aa254c9130f9af922f7e2447","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":9,"crmLevelSwitch":1,"currentWearingBadge":{"badgeId":"a83d7582f45846ffbccbce770ce65d84-1","templateUuid":"a83d7582f45846ffbccbce770ce65d84","name":"Real Trader","description":"Completed a transaction","bigImgUrl":"https://static.tigerbbs.com/2e08a1cc2087a1de93402c2c290fa65b","smallImgUrl":"https://static.tigerbbs.com/4504a6397ce1137932d56e5f4ce27166","grayImgUrl":"https://static.tigerbbs.com/4b22c79415b4cd6e3d8ebc4a0fa32604","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2021.12.21","individualDisplayEnabled":0},"individualDisplayBadges":[{"badgeId":"9427a906234c4b18a82ec3d7730b7fa8-1","templateUuid":"9427a906234c4b18a82ec3d7730b7fa8","name":"Star Contributor","description":"Published at least 3 PICK posts (or 10 IDEA posts) and, within the past 30 days, posted at least 1 PICK post (or 4 IDEA posts) and 1 comment","bigImgUrl":"https://community-static.tradeup.com/news/1866dcf97a73be1c330f85862546aedc","smallImgUrl":"https://community-static.tradeup.com/news/4f5c5fa8e2c7683bb5a7fce8753ee456","redirectLinkEnabled":1,"redirectLink":"https://ttm.financial/activity/market/2023/star-contributors/","hasAllocated":1,"isWearing":0,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2025.02.03","individualDisplayEnabled":1,"backgroundColor":{"dark":"#675a37","tint":"#f9ebc2"},"fontColor":{"dark":"#ffffff","tint":"#ab7a0e"}}],"fanSize":179,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"html":"<html><head></head><body>Nevermind about what is valuation worry about how today's market is going to be. I think we are likely going to see the market puke today and with it, stocks like Tesla will be eadling the charge down. For the very reason this article has spelled out. Over-value, shrinking revenue and profits. And especially, Musk being tettered to a very unstable Godfather......</body></html>","htmlText":"<html><head></head><body>Nevermind about what is valuation worry about how today's market is going to be. I think we are likely going to see the market puke today and with it, stocks like Tesla will be eadling the charge down. For the very reason this article has spelled out. Over-value, shrinking revenue and profits. And especially, Musk being tettered to a very unstable Godfather......</body></html>","text":"Nevermind about what is valuation worry about how today's market is going to be. I think we are likely going to see the market puke today and with it, stocks like Tesla will be eadling the charge down. For the very reason this article has spelled out. Over-value, shrinking revenue and profits. And especially, Musk being tettered to a very unstable Godfather......","highlighted":1,"essential":1,"paper":1,"likeSize":27,"commentSize":0,"repostSize":1,"favoriteSize":0,"link":"https://ttm.financial/post/399426787349136","repostId":1175504218,"repostType":4,"repost":{"id":"1175504218","kind":"news","pubTimestamp":1738476351,"share":"https://www.laohu8.com/m/news/1175504218?lang=&edition=full","pubTime":"2025-02-02 14:05","market":"us","language":"en","title":"Tesla: Once Again, It's Time To Trim","url":"https://stock-news.laohu8.com/highlight/detail?id=1175504218","media":"Seeking Alpha","summary":"Let's dive in.Our Tesla FrameworkIn case you missed our earlier articles on TSLA, here's a quick summary of how we see the stock. Normally, we'd skip writing a section like this, but TSLA is a very volatile, speculative bet, and many investors look at the financials and see entirely different things. Thus, we think it's necessary, first, to establish how we think about the company.In short, we see TSLA as an advanced manufacturing firm, mostly producing cars. Sure, TSLA also manufactures batteri","content":"<html><head></head><body><h2 id=\"id_2350035770\">Summary</h2><ul style=\"\"><li><p>We initially rated Tesla, Inc. stock a Sell in November 2023 due to slowing growth and a lofty valuation. From there, the stock fell 31%.</p></li><li><p>Then, we upgraded Tesla in April 2024 after the market appeared too negative on shares. Since, the stock has risen 126%, driven by speculation around Robotaxis and autonomous driving.</p></li><li><p>Now, Tesla appears overvalued again. We recommend trimming TSLA from your portfolio due to overly optimistic projections around “future products”.</p></li><li><p>We&#39;re downgrading TSLA to a Sell.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/cdc1cd3d3c3dd57b72a9ddb8d4037dbd\" alt=\"White cyborg robotic hand pointing his finger - 3D rendering isolated on free PNG background.\" title=\"White cyborg robotic hand pointing his finger - 3D rendering isolated on free PNG background.\" tg-width=\"750\" tg-height=\"500\"/><span>White cyborg robotic hand pointing his finger - 3D rendering isolated on free PNG background.</span></p><p></p><p>Of all the stocks we&#39;ve covered here on Seeking Alpha, we&#39;re particularly proud of our track record when it comes to <strong>Tesla, Inc.</strong> (NASDAQ:TSLA).</p><p>Our coverage began on the stock in November 2023, when we called the stock a <strong>Sell</strong> based on the company&#39;s slowing growth and lack of progress on key initiatives. At the time, the multiple seemed a bit rich for the company&#39;s output, so we came out as bears:</p><ul style=\"\"><li><p>Tesla: The Range Of Outcomes Is Narrowing; That&#39;s A Bad Thing.</p></li></ul><p>From that point, the stock <strong>fell roughly 31%</strong>, until we upgraded it on April 9th, 2024.</p><p>At that point, shares seemed unduly beat up, in our view, and we upgraded TSLA:</p><ul style=\"\"><li><p>Tesla: When The Time Comes To Buy, You Won&#39;t Want To (Rating Upgrade).</p></li></ul><p>Since then, the stock is <strong>back up roughly 126%</strong>, in which time we put out another bullish article about Robotaxis, arguing that speculation around future gains in autonomous driving and Optimus could drive continued appreciation for investors:</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/5581c8a7e68cb36fb694d47a44ae5139\" alt=\"TSLA\" title=\"TSLA\" tg-width=\"640\" tg-height=\"412\"/><span>TSLA</span></p><p></p><p>All of this is to say that we feel like we have a “good bead” on the company&#39;s valuation and business dynamics.</p><p>From that frame, we feel that the stock has once again become &#39;too expensive&#39;, and it appears as though it could be time, once again, to trim.</p><p><strong>Today</strong>, we&#39;ll cover the recent earnings report, examine the stock&#39;s lofty valuation, and explain why, on balance, we think it&#39;s time to begin pruning TSLA out of your portfolio — at least for now.</p><p>Sound good? Let&#39;s dive in.</p><h2 id=\"id_4071302040\">Our Tesla Framework</h2><p>In case you missed our earlier articles on TSLA, here&#39;s a quick summary of how we see the stock. Normally, we&#39;d skip writing a section like this, but TSLA is a very volatile, <strong>speculative</strong> bet, and many investors look at the financials and see entirely different things. Thus, we think it&#39;s necessary, first, to establish how we think about the company.</p><p>In short, we see TSLA as an advanced manufacturing firm, <strong>mostly</strong> producing cars. Sure, TSLA also manufactures batteries and other components in its <strong>Energy</strong> segment, but at its heart, the firm is an automotive company.</p><p>Why? Because this is where most of TSLA&#39;s financial results are derived. A massive chunk of the company&#39;s revenues come from the automotive segment, which means that this is a natural point of comparison for analysts:</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/93a2427e63efa5746b2965c9ceb9e2e4\" alt=\"TSLA\" title=\"TSLA\" tg-width=\"640\" tg-height=\"80\"/><span>TSLA</span></p><p></p><p>Thus, when contrasted with competitors, Tesla&#39;s $1.3 trillion valuation can be very challenging to comprehend.</p><p>In our view, this valuation difference vs. peers is largely down to TSLA&#39;s “upcoming” product launches, mainly <strong>full self-drive (“FSD”) &amp; Robotaxis</strong>, and <strong>Optimus</strong> (the robot):</p><blockquote><p></p><p>A significant portion of Tesla&#39;s current value is tied to higher margin, non-automotive, [&#39;future&#39;] products like Robotaxi, Dojo, and Optimus.</p><p>We&#39;d estimate that about 80% of TSLA&#39;s &#39;future product&#39; value is perceived to be in the Robotaxi segment, as it is the closest to &#39;production&#39; and the most natural extension of TSLA&#39;s current business.</p><p>If you take this estimate at face value, then it means [robotaxis are] likely incredibly consequential for <strong>~65% of TSLA&#39;s market cap </strong>or about $500 billion in shareholder value.</p></blockquote><p>This estimate was from October. Since then, TSLA has rallied more than 60% while financial results have largely remained flat, which signals that basically <strong>all of this appreciation</strong> has been due to <strong>investors assigning a higher multiple</strong> to these future product launches.</p><p>For TSLA, we see two main camps within the analyst community. There are those that see the stock as a purely “car” company (and thus, overvalued), and those that see it as an advanced manufacturer of the future, including automated cars, robots, software, energy solutions, and more (which would make it undervalued).</p><p>We sit somewhere in the middle. TSLA is clearly an automotive company right now, but if the company can execute — which they have proven that they can — then there could be significantly more value that gets unlocked for investors in coming years.</p><p>As sentiment around the company shifts, our “middle of the road” understanding gives us a leg up in identifying when things &#39;extend&#39; too far in one direction or the other, which is precisely what we think we see right now.</p><h2 id=\"id_2739569595\">Tesla&#39;s Q4</h2><p>Looking at the most recent quarter, Tesla turned in what most are collectively calling a “stinker.”</p><p>Revenue came in as a massive miss, and the firm&#39;s top-line growth also left much to be desired. EPS also came in below expectations, albeit slightly.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/c450991d7c204335d448252a6501dcd8\" alt=\"TSLA\" title=\"TSLA\" tg-width=\"640\" tg-height=\"389\"/><span>TSLA</span></p><p></p><p>All in all, it was a pretty dismal showing.</p><p>Of particular note was the company&#39;s considerable drop in TTM net income, which is largely due to TSLA&#39;s car pricing strategy (cutting) having a continued impact on margins:</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/ab5185ab57962b8842cdd2391d696294\" alt=\"TSLA\" title=\"TSLA\" tg-width=\"640\" tg-height=\"410\"/><span>TSLA</span></p><p></p><p>These tactical pricing changes are meant to keep TSLA car volumes up, but it has put serious pressure on gross margins over time.</p><p>In other words, <strong>competition</strong> is heating up, materializing, and eating into investor&#39;s bottom-line returns:</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/2c65e31186dd1af096afe7c1045b3cba\" alt=\"TSLA\" title=\"TSLA\" tg-width=\"640\" tg-height=\"302\"/><span>TSLA</span></p><p></p><p>For much of TSLA&#39;s run over the last 5 years, many bulls have argued that the company&#39;s product was differentiated enough to warrant a higher multiple, on the back of structurally higher margins. However, now, this doesn&#39;t appear to be the case.</p><p>Granted, some decline in TTM net income is from the drop-off of a positive Q4 in 2023 which had a huge, unusual tax item, but even adjusted for that, TSLA&#39;s <strong>net income is still down double-digit percentages</strong>.</p><p>Trump&#39;s cutting of EV incentives only presents further headwinds to the business.</p><p>Similarly, TSLA&#39;s profitability would be down <strong>even more</strong> without Bitcoin. As we can see from the 10K, a material percentage of TSLA&#39;s $7.1 billion in net income is from an increase in the fair value of the firm&#39;s total Bitcoin holdings (emphasis added):</p><blockquote><p>Other income (expense), net, changed favorably by <strong>$523 million</strong> in the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily due to remeasurement of our bitcoin digital assets to fair value in 2024.</p></blockquote><p>Overall, it&#39;s not a pretty picture for the core business.</p><p>Bulls might say that these pricing headwinds are transient, or that the consumer environment is cyclical, but we&#39;d counter by saying <strong>hey, that&#39;s the car business</strong>.</p><p>In other words, maybe Tesla <em>isn&#39;t</em> that different from competitors when it comes to making and selling cars.</p><h2 id=\"id_3009924548\">The Valuation</h2><p>But what is Tesla worth?</p><p>If you slap on car industry averages to Tesla&#39;s financial results, then you&#39;re looking at a P/E of ~7x and a P/S of roughly 0.6x:</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/816000a0e759e7a6c468d88f42c1758c\" alt=\"TSLA\" title=\"TSLA\" tg-width=\"640\" tg-height=\"176\"/><span>TSLA</span></p><p></p><p>This would output a market cap between roughly ~$49 billion and ~$57 billion. Considering the current market cap of <strong><em>$1.28 trillion</em></strong>, the market clearly doesn&#39;t agree with this framing.</p><p>Looking now at the earnings call, TSLA management heavily, <strong>heavily</strong> focused on the company&#39;s future product lines — mainly Optimus and robotaxis (emphasis added):</p><blockquote><p></p><p>We made many critical investments in 2024 in manufacturing AI and robotics that will bear <strong>immense</strong> fruit in the future, <strong>immense</strong>.</p><p>Like it&#39;s, in fact, to such a scale that it is difficult to comprehend. And I&#39;ve said this before, and I&#39;ll stand by it. I see a path, I&#39;m not saying it&#39;s an easy path, but I see a path for <strong>Tesla being the most valuable company in the world by far</strong>, not even close.</p><p>Like, maybe several times more than, I mean, there is a path where <strong>Tesla is worth more than the next top five companies combined</strong>. There&#39;s a path to that. I mean, I think it&#39;s like an incredibly, just like a difficult path, but it is an achievable path.</p><p>So -- and that is overwhelmingly due to <strong>autonomous vehicles</strong> and autonomous <strong>humanoid robots</strong>.</p></blockquote><p>What a sales pitch!</p><p>To us, <strong>this</strong> makes Tesla&#39;s <em>story</em> “clear.” For investors, this is clearly where the value is coming from. The core business isn&#39;t growing much anymore as the market saturates and competition heats up — fine.</p><p>However, the company&#39;s balance sheet is strong, and as long as there&#39;s serious potential in TSLA&#39;s new businesses, then the stock gets the premium.</p><p>From this point, it&#39;s a “show me” story.</p><p>For our money, investors are too optimistic about this future.</p><p>In our previous article, we laid out what an <strong>incredibly</strong> optimistic bull case for what Robotaxis could be worth, assuming that they launched this year:</p><blockquote><p></p><p>In this model, adoption is slow to start, but quickly scales as users join the network and make their idle Teslas earn while they sleep.</p><p>Again, the demand is the real constraint here, but given the likely lower cost of automated ride hail, it should prove popular with cost-conscious consumers:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/b20aed07e35218fcce1a3d01c41ccfb0\" alt=\"TSLA\" title=\"TSLA\" tg-width=\"640\" tg-height=\"199\"/><span>TSLA</span></p><p style=\"text-align: left;\"><strong>PropNotes</strong></p><p>In this scenario, we see TSLA earning more per ride, and with a larger network of supply and demand under their control.</p><p>This scenario would represent a 60% upside for the NPV of the robotaxi segment (at a 4% discount rate), which works out to roughly 37% upside for TSLA&#39;s stock.</p><p>This works out to a share price of roughly <strong>$345 per share</strong>.</p></blockquote><p>Under this optimistic scenario, robotaxis launch immediately and gain market share quickly. In that case, we&#39;d argue Tesla is maybe worth $345 per share. Currently, the stock is trading at around $400, and robotaxis aren&#39;t expected until June, in a single city (Austin).</p><p>To us, this shows undue optimism, part of which may be caused by statements like this from management around the new product lines (emphasis added):</p><blockquote><p></p><p>I&#39;ve -- some of these things I&#39;ve said for quite a long time and I know people said, well, Elon is the boy who cried wolf-like several times but I&#39;m telling you there&#39;s a damn wolf this time and you can drive it. In fact, it can drive you. <strong>It&#39;s a self-driving wolf</strong>.</p><p>These things that already exist with no incremental cost change, just a software update, now have five times or more utility than they currently have. I think this will be the <strong>largest asset value increase in human history</strong>. Maybe there&#39;s something bigger, but I just don&#39;t know what it is. And so people who look in the rearview mirror are looking for past precedent, except I don&#39;t think there is one.</p><p>I think long-term, Optimus will be -- Optimus has the potential to be north of <strong><em>$10 trillion in revenue</em></strong>. Like, it&#39;s really bananas.</p></blockquote><p>All told, we don&#39;t expect that within a few years&#39; time, TSLA will be raking in 1/10th of global GDP in revenues on a single product alone.</p><h2 id=\"id_3741566877\">Summary</h2><p>Thus, we come to our summary of Tesla.</p><p>At this price, there&#39;s potentially significant value in the company&#39;s future projects, as the market has shown, but at present, the valuation of those projects appears too speculative.</p><p>Overall, this mispricing means that investors should consider selling out of their stakes and waiting to buy lower. If the past is anything to go by, you&#39;ll get your chance to do just that.</p><p>Cheers!</p></body></html>","source":"lsy1728464409321","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla: Once Again, It's Time To Trim</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla: Once Again, It's Time To Trim\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-02-02 14:05 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4753962-tesla-once-again-time-to-trim-double-rating-downgrade><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryWe initially rated Tesla, Inc. stock a Sell in November 2023 due to slowing growth and a lofty valuation. From there, the stock fell 31%.Then, we upgraded Tesla in April 2024 after the market ...</p>\n\n<a href=\"https://seekingalpha.com/article/4753962-tesla-once-again-time-to-trim-double-rating-downgrade\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{},"source_url":"https://seekingalpha.com/article/4753962-tesla-once-again-time-to-trim-double-rating-downgrade","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1175504218","content_text":"SummaryWe initially rated Tesla, Inc. stock a Sell in November 2023 due to slowing growth and a lofty valuation. From there, the stock fell 31%.Then, we upgraded Tesla in April 2024 after the market appeared too negative on shares. Since, the stock has risen 126%, driven by speculation around Robotaxis and autonomous driving.Now, Tesla appears overvalued again. We recommend trimming TSLA from your portfolio due to overly optimistic projections around “future products”.We're downgrading TSLA to a Sell.White cyborg robotic hand pointing his finger - 3D rendering isolated on free PNG background.Of all the stocks we've covered here on Seeking Alpha, we're particularly proud of our track record when it comes to Tesla, Inc. (NASDAQ:TSLA).Our coverage began on the stock in November 2023, when we called the stock a Sell based on the company's slowing growth and lack of progress on key initiatives. At the time, the multiple seemed a bit rich for the company's output, so we came out as bears:Tesla: The Range Of Outcomes Is Narrowing; That's A Bad Thing.From that point, the stock fell roughly 31%, until we upgraded it on April 9th, 2024.At that point, shares seemed unduly beat up, in our view, and we upgraded TSLA:Tesla: When The Time Comes To Buy, You Won't Want To (Rating Upgrade).Since then, the stock is back up roughly 126%, in which time we put out another bullish article about Robotaxis, arguing that speculation around future gains in autonomous driving and Optimus could drive continued appreciation for investors:TSLAAll of this is to say that we feel like we have a “good bead” on the company's valuation and business dynamics.From that frame, we feel that the stock has once again become 'too expensive', and it appears as though it could be time, once again, to trim.Today, we'll cover the recent earnings report, examine the stock's lofty valuation, and explain why, on balance, we think it's time to begin pruning TSLA out of your portfolio — at least for now.Sound good? Let's dive in.Our Tesla FrameworkIn case you missed our earlier articles on TSLA, here's a quick summary of how we see the stock. Normally, we'd skip writing a section like this, but TSLA is a very volatile, speculative bet, and many investors look at the financials and see entirely different things. Thus, we think it's necessary, first, to establish how we think about the company.In short, we see TSLA as an advanced manufacturing firm, mostly producing cars. Sure, TSLA also manufactures batteries and other components in its Energy segment, but at its heart, the firm is an automotive company.Why? Because this is where most of TSLA's financial results are derived. A massive chunk of the company's revenues come from the automotive segment, which means that this is a natural point of comparison for analysts:TSLAThus, when contrasted with competitors, Tesla's $1.3 trillion valuation can be very challenging to comprehend.In our view, this valuation difference vs. peers is largely down to TSLA's “upcoming” product launches, mainly full self-drive (“FSD”) & Robotaxis, and Optimus (the robot):A significant portion of Tesla's current value is tied to higher margin, non-automotive, ['future'] products like Robotaxi, Dojo, and Optimus.We'd estimate that about 80% of TSLA's 'future product' value is perceived to be in the Robotaxi segment, as it is the closest to 'production' and the most natural extension of TSLA's current business.If you take this estimate at face value, then it means [robotaxis are] likely incredibly consequential for ~65% of TSLA's market cap or about $500 billion in shareholder value.This estimate was from October. Since then, TSLA has rallied more than 60% while financial results have largely remained flat, which signals that basically all of this appreciation has been due to investors assigning a higher multiple to these future product launches.For TSLA, we see two main camps within the analyst community. There are those that see the stock as a purely “car” company (and thus, overvalued), and those that see it as an advanced manufacturer of the future, including automated cars, robots, software, energy solutions, and more (which would make it undervalued).We sit somewhere in the middle. TSLA is clearly an automotive company right now, but if the company can execute — which they have proven that they can — then there could be significantly more value that gets unlocked for investors in coming years.As sentiment around the company shifts, our “middle of the road” understanding gives us a leg up in identifying when things 'extend' too far in one direction or the other, which is precisely what we think we see right now.Tesla's Q4Looking at the most recent quarter, Tesla turned in what most are collectively calling a “stinker.”Revenue came in as a massive miss, and the firm's top-line growth also left much to be desired. EPS also came in below expectations, albeit slightly.TSLAAll in all, it was a pretty dismal showing.Of particular note was the company's considerable drop in TTM net income, which is largely due to TSLA's car pricing strategy (cutting) having a continued impact on margins:TSLAThese tactical pricing changes are meant to keep TSLA car volumes up, but it has put serious pressure on gross margins over time.In other words, competition is heating up, materializing, and eating into investor's bottom-line returns:TSLAFor much of TSLA's run over the last 5 years, many bulls have argued that the company's product was differentiated enough to warrant a higher multiple, on the back of structurally higher margins. However, now, this doesn't appear to be the case.Granted, some decline in TTM net income is from the drop-off of a positive Q4 in 2023 which had a huge, unusual tax item, but even adjusted for that, TSLA's net income is still down double-digit percentages.Trump's cutting of EV incentives only presents further headwinds to the business.Similarly, TSLA's profitability would be down even more without Bitcoin. As we can see from the 10K, a material percentage of TSLA's $7.1 billion in net income is from an increase in the fair value of the firm's total Bitcoin holdings (emphasis added):Other income (expense), net, changed favorably by $523 million in the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily due to remeasurement of our bitcoin digital assets to fair value in 2024.Overall, it's not a pretty picture for the core business.Bulls might say that these pricing headwinds are transient, or that the consumer environment is cyclical, but we'd counter by saying hey, that's the car business.In other words, maybe Tesla isn't that different from competitors when it comes to making and selling cars.The ValuationBut what is Tesla worth?If you slap on car industry averages to Tesla's financial results, then you're looking at a P/E of ~7x and a P/S of roughly 0.6x:TSLAThis would output a market cap between roughly ~$49 billion and ~$57 billion. Considering the current market cap of $1.28 trillion, the market clearly doesn't agree with this framing.Looking now at the earnings call, TSLA management heavily, heavily focused on the company's future product lines — mainly Optimus and robotaxis (emphasis added):We made many critical investments in 2024 in manufacturing AI and robotics that will bear immense fruit in the future, immense.Like it's, in fact, to such a scale that it is difficult to comprehend. And I've said this before, and I'll stand by it. I see a path, I'm not saying it's an easy path, but I see a path for Tesla being the most valuable company in the world by far, not even close.Like, maybe several times more than, I mean, there is a path where Tesla is worth more than the next top five companies combined. There's a path to that. I mean, I think it's like an incredibly, just like a difficult path, but it is an achievable path.So -- and that is overwhelmingly due to autonomous vehicles and autonomous humanoid robots.What a sales pitch!To us, this makes Tesla's story “clear.” For investors, this is clearly where the value is coming from. The core business isn't growing much anymore as the market saturates and competition heats up — fine.However, the company's balance sheet is strong, and as long as there's serious potential in TSLA's new businesses, then the stock gets the premium.From this point, it's a “show me” story.For our money, investors are too optimistic about this future.In our previous article, we laid out what an incredibly optimistic bull case for what Robotaxis could be worth, assuming that they launched this year:In this model, adoption is slow to start, but quickly scales as users join the network and make their idle Teslas earn while they sleep.Again, the demand is the real constraint here, but given the likely lower cost of automated ride hail, it should prove popular with cost-conscious consumers:TSLAPropNotesIn this scenario, we see TSLA earning more per ride, and with a larger network of supply and demand under their control.This scenario would represent a 60% upside for the NPV of the robotaxi segment (at a 4% discount rate), which works out to roughly 37% upside for TSLA's stock.This works out to a share price of roughly $345 per share.Under this optimistic scenario, robotaxis launch immediately and gain market share quickly. In that case, we'd argue Tesla is maybe worth $345 per share. Currently, the stock is trading at around $400, and robotaxis aren't expected until June, in a single city (Austin).To us, this shows undue optimism, part of which may be caused by statements like this from management around the new product lines (emphasis added):I've -- some of these things I've said for quite a long time and I know people said, well, Elon is the boy who cried wolf-like several times but I'm telling you there's a damn wolf this time and you can drive it. In fact, it can drive you. It's a self-driving wolf.These things that already exist with no incremental cost change, just a software update, now have five times or more utility than they currently have. I think this will be the largest asset value increase in human history. Maybe there's something bigger, but I just don't know what it is. And so people who look in the rearview mirror are looking for past precedent, except I don't think there is one.I think long-term, Optimus will be -- Optimus has the potential to be north of $10 trillion in revenue. Like, it's really bananas.All told, we don't expect that within a few years' time, TSLA will be raking in 1/10th of global GDP in revenues on a single product alone.SummaryThus, we come to our summary of Tesla.At this price, there's potentially significant value in the company's future projects, as the market has shown, but at present, the valuation of those projects appears too speculative.Overall, this mispricing means that investors should consider selling out of their stakes and waiting to buy lower. If the past is anything to go by, you'll get your chance to do just that.Cheers!","news_type":1},"isVote":1,"tweetType":1,"viewCount":1589,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":["TSLA"],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":true,"length":304,"optionInvolvedFlag":false,"xxTargetLangEnum":"ORIG"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/399426787349136"}