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Even as TSLA’s core EV business continues to experience negative growth, its market capitalization has soared back up to $1.4 trillion, matching its highest valuation ever.
TSLA’s bullish story now rests on the twin pillars of, supposedly, its self-driving and robotics technology. With the latter it will be facing withering competition from China which, unsurprisingly, now dominates this industry. (A loud shout-out to Luke Gromen for calling my attention to the following image.)
When it comes to the former, autonomous vehicles (AVs), it’s much the same story. Low-cost models from China’s BYD are increasingly including self-driving features. The Asia-Pacific (APAC) region now represents over half of all global AV sales and, naturally, China controls the largest market share in that region which includes roughly 60% of planet’s population, or over four billion souls.
Despite the above, TSLA’s stock has enormous upside momentum and it may be in the process of making a new all-time high. Accordingly, it could continue running before experiencing another 50% decline, as it did from late 2021 to the end of 2022 and also earlier this year.
Alternatively, it could be argued it is in the process of making a double top. What is unquestionable is that it is an incredibly pricey stock. Its P/E ratio is 275 on this year’s earnings estimates, despite that profits are forecast to be down 56% from their 2022 peak.
If we are on the verge of witnessing the implosion of the fourth immense bubble of the last 25 years, TSLA’s stock could be among its worst casualties.
David “The Haymaker” Hay
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