- ARK Invest believes Tesla can capture 23% market share in the automobile industry.
- Tesla’s balance sheet suggests it does not have enough cash to even maintain its current market share.
- ARK has been dumping Tesla shares, so investors shouldn’t completely trust their forecast.
Tesla stock has been flying high over the past few months. The stock quickly recovered from the CyberTruck launch fiasco and is back trading near (highs.
Cathy’s bear case for Tesla values the company at roughly $ whereas her bull case gives the stock an insane valuation of $ 4, (************************************************************************. Given her optimism, she likely believes her claim about Tesla’s market share. However, in reality, Tesla will likely never get anywhere close to the 23% mark for multiple reasons.
Tesla does not have the Resources
Legacy car manufacturers have been in business many decades and none of them have ever gotten anywhere close to the (******************************************************************% mark. In fact the biggest two — Volkswagen and Toyota — don’t even have (******************************************************************% market share combined.
**** put the ridiculousness of the forecast into perspective, Toyota and Volkswagen sold a total of roughly 60 .4 million cars in 2019. By comparison, if Tesla hits the bottom-end of its guidance range it will sell just (*******************************************************, 000 cars in 218636.
To make matters worse, sales of Tesla’s high margin cars, the Model S and the Model X have been declining. Earlier this year, Elon Musk even said the company isonly making both the models ‘for sentimental reasons’ (**************.
The Model 3 and the upcoming Model Y will more than make up for the lost volumes of the Model S and X. However, replacing high-margin cars with low-margin cars won’t prove to be a winning strategy in the long run, especially for a loss-making, highly-leveraged company like Tesla.
Tesla will need many new ‘Gigafactories’ to scale up to tens of millions of annual unit production. But the company just doesn’t have enough money to do it. In fact, if you take into consideration the production and testing costs of the Model Y and the CyberTruck, the company does not even have the money to make the Berlin Gigafactory it announced last month.
And to make matters worse, overover
With no sustainable profitability in sight, the Silicon Valley car maker will face severe difficulties in just maintaining its current market share, let alone growing it.
ARK Investdumped a big chuckof its Tesla holdings just days before the company posted the third quarter results and missed the entire rally to $ .
For a firm that believes Tesla is going to hit $ 1030 in the worst case scenario, dumping $ 39 million in stock for less than $ doesn’t really make sense. So maybe Cathy doesn’t completely believe in her thesis and investors should take her forecasts with a pinch of salt.
Samburaj Das.
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