TSLA TESLA VALUATION UPDATE - AT THE LOWS NOW
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If you examine my last TSLA chart, I pointed out that at 192 you could buy TSLA at a low 7.2 x's sales and get a good entry price. In the summer decline, which was a combination of market correction, reduced annual sales targets and slower release of Model-X and trouble with manufacturing the Model-X and very weak prices for crude oil, TSLA had a sharp drop to 195 and then a monster rally up to 9 times sales at 270.
Since that rally we have new sales numbers and the 7.2 PSR level has lifted from 192 to 205 and represents the new buy level. TSLA rallied on earnings (losses, actually) to the 230+ level where it hit 8 PSR and has been drifting back down as the short-sellers took their losses and packed it in to survive to fight another day.
So now we find ourselves fighting between PSR levels of 8 at the tops and 7 at the bottoms for TSLA whereas a year ago or more we were at 10-14. The valuation has come down 50% so far and if TSLA keeps grinding sideways it will be down to 3.5 in a year to 18 months. Given that TSLA has very high profit margins once at scale AND given that TSLA is a software company and a battery manufacturer and a home & business energy backup company, I could see the long term valuation range for TSLA be much higher than other auto manufacturers, which typically have PSR's of less than 1.
We all need to see profitabilty, of course, but looking at the FUNDAMENTALS on the chart helps you to get bullish when the price FALLS and bearish when the price RISES instead of the opposite. Most technical traders get caught being bullish at the tops and bearish at the bottoms, but including fundamental valuation ranges can help tilt the odds in your favor.
207.05 close Friday, 11/12/2015
To be clear - buy the green box (7.2 PSR) and sell in the blue box (8 PSR)
Tim
Since that rally we have new sales numbers and the 7.2 PSR level has lifted from 192 to 205 and represents the new buy level. TSLA rallied on earnings (losses, actually) to the 230+ level where it hit 8 PSR and has been drifting back down as the short-sellers took their losses and packed it in to survive to fight another day.
So now we find ourselves fighting between PSR levels of 8 at the tops and 7 at the bottoms for TSLA whereas a year ago or more we were at 10-14. The valuation has come down 50% so far and if TSLA keeps grinding sideways it will be down to 3.5 in a year to 18 months. Given that TSLA has very high profit margins once at scale AND given that TSLA is a software company and a battery manufacturer and a home & business energy backup company, I could see the long term valuation range for TSLA be much higher than other auto manufacturers, which typically have PSR's of less than 1.
We all need to see profitabilty, of course, but looking at the FUNDAMENTALS on the chart helps you to get bullish when the price FALLS and bearish when the price RISES instead of the opposite. Most technical traders get caught being bullish at the tops and bearish at the bottoms, but including fundamental valuation ranges can help tilt the odds in your favor.
207.05 close Friday, 11/12/2015
To be clear - buy the green box (7.2 PSR) and sell in the blue box (8 PSR)
Tim
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TSLA reached the blue box (but I clearly didn't update the status when it hit that level, sorry.) - I hope you banked your profit too.
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