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Is TESLA valuation justified ?
Any company and for profit business in the world has ultimately the aim of producing profit (and cash flow) and make a return for the shareholders over a certain period of time. The interesting part is that any person would make this calculation facing the decision to buy a private business, but when it comes down to public listed companies people seems forgetting (or worst not understanding) that ultimately they are buying a piece of business that eventually should give them a return overtime. So let's do some math..TESLA (TSLA) is a carmaker and like any company it should be compared to companies belonging to the same industry. TESLA market cap (which represent the amount of money the market think a company is valued in that moment in time) is about 270 billions at the time of this post. The company has not produced any profit so far in any year and below a snapshot of the income statement for FY2019, where the company has a loss of 775 Million $. The Gross Profit is of around 4 Billions which for a company worth 270 B$ looks very very tiny. Just a number to think about, Toyota market cap is less than Tesla one and around 200 B$ and its last profit has been of about 20B$...so our point of view is that as a value investor you should always think how long will take ,with the expected cash flow (hopefully :-)) generated from a company , to have your money back.... This post does not aim to do a full analysis on TESLA stock but just to point out and remember that for a value investor, fundamentals should be key to make an investment decision, which for most of people "playing" on the stock market seems a lesson never learnt or often forgotten, with obvious consequences on their finances.