Tesla Stock Fell 66% OVERNIGHT | New Price Target Tesla 3:1 Stock Split

TL;DR

Stock splits do not make a stock cheaper; they only lower the price per share. Tesla's financials indicate strong revenue growth and free cash flow, but caution should be exercised due to its high PE ratio and the sustainability of its profit margins.

Transcript

tesla stock is down 66 today just kidding so the reason that we put that in the title is i wanted to have an absolute click bait and the reason being is everyone confuses a stock split with a stock being cheaper it is not cheaper i'm going to repeat till i'm blue in the face a stock split does not make the stock cheaper it makes the the price per s... Read More

Key Insights

• 🚄 Stock splits do not affect the market capitalization of a company. (Bullet 1)
• 🥶 Tesla's financials show strong revenue growth and impressive free cash flow. (Bullet 3)
• 🚄 Tesla's high PE ratio and potential sustainability issues with profit margins pose concerns. (Bullet 4)
• 🚄 The stock analyst tool can help determine a reasonable price to pay for Tesla based on assumptions about future growth and financial metrics. (Bullet 4)
• 🥺 Previous year's exceptional demand for Tesla cars led to increased profit margins. (Bullet 4)
• ☠️ Tesla's growth rate is unlikely to be sustained at the same level in the future. (Bullet 5)
• 👨‍🔬 Community participation and researching both bullish and bearish perspectives can provide valuable insights. (Bullet 5)

Questions & Answers

Q: What is the purpose of a stock split?

A stock split is carried out by a company to increase the number of shares outstanding while maintaining the same market capitalization. It is not done to make the stock cheaper.

Q: Should I invest in Tesla solely based on its popularity as an electric vehicle manufacturer?

No, popularity does not necessarily equate to a good investment. As a value investor, it is important to assess the quantitative aspects of the business, such as its financials, before making a decision.

Q: What are some concerning aspects of Tesla's financials?

Tesla's high PE ratio, indicating an already high valuation, raises red flags. Additionally, the significant difference in profit margins from last year to the previous five-year average warrants further investigation into its sustainability.

Q: How can I determine a reasonable price to pay for Tesla?

By using the stock analyzer tool, you can make assumptions about revenue growth, profit margins, and future PE ratios. Based on these assumptions, the tool will provide a range of prices to consider.

Summary & Key Takeaways

• Stock splits do not make a stock cheaper but only lower the price per share, maintaining the market capitalization.

• Tesla is a popular car company that is the leading manufacturer of electric vehicles, but that does not automatically mean it should be bought as an investment.

• Tesla's financials show impressive revenue growth and free cash flow, but caution should be applied due to its high PE ratio and the need to assess the sustainability of profit margins.