Last updated on November 16, 2021
There is a lot of people who think Tesla’s market cap at $2tn is excessive. Let me show you why we contend that just is not so.
Let’s look at the mobile phone market and AAPL in particular
Apple and the Mobile phone Industry
|Total global sales||$522 bn|
|Apple Gross Margin 2021||43%|
|Gross potential AAPL margin of Global Market in Multiplying the above||$224bn|
|Apple Share of Market (2021)||15%|
|AAPL unit sales growth||Flat|
|Market Share % growth||Decreasing|
|Competition||Xiomi, and Generic|
Now lets look at Tesla and the Auto market
|Total global sales||$2,500 bn|
|Tesla Gross Margin 2021||30%|
|Gross margin of Global Market in Multiplying the above||$750bn|
|Assume Potential TSLA Share of Market||15%|
|TSLA unit sale growth||explosive / manufacturing limited|
|Competition||Slow sluggish encumbents|
Other key differentiators
- Tesla is still building new products
- Tesla is innovating faster
- Casting large parts of vehicles
- Evolution into new areas
- Car insurance
- Robo Taxis
- Trucks, vans and utilities
So I would suggest that Tesla should at least equal AAPL in market Cap and should easily be valued at Apples $2.5tn.
But the markets are much bigger in auto. Auto $market (margin) is 3 x Mobiles
I believe that customer loyalty is similar between AAPL and TSLA (both idolize their vendor with a religious zeal).
Some would contend that Elon Musk is a game changer, whereas Apple has not really innovated for 15 years since the first iPhone.
So – I see easy valuation for Tesla at 2 x APPL market cap and therefore $5tn.
These are only my personal views and not for trading advice see here
Disclosure : I do own TSLA shares and plan to buy more
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