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On June 30, I wrote about how Nikola (NASDAQ: NKLA) overestimated and damaged speculation. In less than two months since this history, inventory has fallen by 36.3%. I still think NKLA, Tesla (NASDAQ: TSLA) and other electric vehicle inventories are trapped in a market bubble.
I’ve told investors to stay away from Tesla, Nikola and other electric vehicle stocks. At least stay away until the bubble deflates a little more and the titrations return to earth.
However, smart investors can take advantage of a known peer trading to buy Tesla today, even with its ridiculous existing valuation.
But since Tesla’s bulls claim the company is the next tech giant, such as Amazon.com (NASDAQ: AMZN), Facebook (NASDAQ: FB) or Apple (NASDAQ: AAPL), let’s make another comparison. These generation shares have an expected average profit of around 42, a reduction of more than 50% compared to TSLA shares. They also work in the industry with an average price/sales ratio of 7.35, a 30% reduction compared to Tesla.
Tesla is not the only name caught in the bubble of electric vehicles. There are dozens of them. But Nikola is one of the highest cherished of all. I’d love to compare sales revenue and Nikola’s multiples to Tesla’s, but Nikola doesn’t. Nikola does not necessarily have any profit or turnover compatible with it.
In the vacuum, I believe that investors stay away from TSLA shares for several reasons. Valuation is the most important thing. But compared to Nikola, Tesla looks like a dream investment.
Essentially, Tesla and Nikola are fairy tale stocks. Hitale shares are not evaluated on the basis of the feasibility of its trading models, its indicators of expansion and profits or the adequacy of its balance sheets. They are valued based on the stories the company tells investors about the quality of things in the future. For example, Tesla’s cash fell 4.9% this quarter despite the launch of the Model Y and the opening of its gigafactory in China. But just look at how many products the company has in development. Cybertruck, semi-trailer, Roadster, fully autonomous autopilot and now (no joke) the Tesla spacecraft are in other stages of study and development.
Like I said, I’m skeptical of this story. But if someone asks me which company is the most likely to make this fairy tale, it’s going to have to be Tesla.
For the most purpose, I’m a TSLA stock fan. In fact, I think there is a strong option that the stock will perform lower in the next 10 or 15 years.
But that industry about whether Tesla will be marketed at $20 or $2000 in two years. This is strictly Tesla beating Nikola.
I propose that investors opt for long TSLA stocks and Nikola’s short sales. Nikola has a brilliant long-term expansion ahead of him. But its market capitalization of $16.3 billion is far-fetched given that the company doesn’t even have a product on the market right now.
Wayne Duggan has been a contributor to U.S. News and World Report Investing since 2016 and is an editor at Benzinga, where he has written more than 7,000 articles. Mr. Duggan is the Beating Wall Street With Common Sense, which focuses on the psychology of investment and practical methods for overcoming the stock market. At the time of writing, Wayne Duggan had long been general manager.
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