Tesla Is a Sell Again

I have disliked Tesla (TSLA) for a while, but not recently. In fact, I told a fan of the product and the stock that it would likely find support near $145 ahead of it bouncing slightly below there. Today, I took a short position in it through an ETF, T Rex 2X Inverse Tesla Daily (TSLZ). I am not really aware of Tuttle Management, the issuer, but it was more liquid than another inverse ETF. Again, I don't trade cannabis stocks personally, as I don't want any conflicts of interest with my subscribers at 420 Investor. I also don't write about non-cannabis stocks, like Tesla, at Seeking Alpha.

The Chart Shows a Huge Risk for TSLA

The six-month chart shows the recent low followed by a huge bounce:

The company just reported shipments, and they apparently weren't as bad as some had feared. The stock left a gap off of the low set in April, and it left another one yesterday. This morning, the stock is trading in the pre-market ahead of the high yesterday.

Not all gaps get filled, and sometimes big moves are justified. I don't think this is the case for this stock now. It has lifted a lot since the low in April. It is still down just a little year-to-date.

The Valuation Is Quite High for TSLA

Tesla is not an artificial intelligence (AI) company, though it is exposed in its operations. It is a car company. The market cap last night was about $669 billion. Compared to the current outlook by analysts for 2024, it trades at a PE of 86X. Looking at 2025, the PE is 64X. Tesla has $17 billion net cash, so its enterprise value is a bit lower than the market cap. Comparing the enterprise value to adjusted EBITDA expected for 2024 and 2025 results in ratios of 47X and 36X respectively. These are very big numbers! Perhaps, though, the estimates are rising. Nope! The analysts have been cutting them.

Conclusion

I reviewed the Elon Musk biography here recently, calling it interesting, which it was. I have been negative on large stocks for a while, and those who think that I am wrong about TSLA may take comfort in this. I do remain very negative. Good luck to those who are long Tesla, as I think that they need to be lucky.