The quick rise restored a big chunk of the wealth Tesla’s fans lost since its shares collapsed 50% from their all-time high in December. But for anyone interested in purchasing the stock today, it’s an unwelcome development. The latest spike merely makes what even after that steep fall appeared a highly overvalued player even more outrageously expensive, based on conventional, sober analysis of the numbers. As I stated in the previous piece, Tesla in Q1 generated more than 100% of its earnings on the sale of regulatory credits, a benefit that Musk acknowledges will fade in the future. Over the past four quarters, Tesla’s garnered a paltry $3.5 billion on the “hardcore” business of making and selling EVs and batteries. (It lost $13 million on those franchises in Q1.) What I call the “Elon Musk Hope Premium,” the bulge investors award for the products he’s touted but that haven’t yet arrived, accounts for $850 billion, or over 90% of the current market cap.
The required growth rate in GAAP net profits from $3.5 billion in core, repeatable profits today: 50% a year. The problem: Tesla’s numbers aren’t pointing skyward to make that happen. They just keep tumbling as the “Trump Hope Premium” keeps swelling.
