Tesla is overpriced at about 400x earnings and 13x sales; even optimistic 10-year assumptions give an average intrinsic value near $370 against a ~$380 price. Its five-year price is flat despite doubled sales and return on capital has fallen to 3%. He avoids it, though the stock could keep rising.

Elon Musk may be about to make the boldest move in business history, merging Tesla and SpaceX into a single empire worth more than $3.7 trillion.

Last January, Bloomberg reported that SpaceX was seriously considering a merger with Tesla. So, anyone can now buy shares in both Tesla and SpaceX.

Tesla owns a small stake in SpaceX worth approximately $2 billion, and recently sold SpaceX giant Megapack batteries worth approximately $405 million.

Are Tesla and SpaceX more valuable individually or as a single company? Tesla is valued at approximately $1.5 trillion,

Tesla has a profitable car business, but it is investing huge sums in new projects. In one quarter, Tesla spent about $6 billion on building and expansion,

while Tesla has about $43 billion. So let's analyze Tesla's situation first. In the last quarter, something strange happened. Its revenues jumped by 25%, but profits from its core business fell by a larger percentage.

Because Tesla is spending huge sums to build its future: robotics, self-driving, and artificial intelligence, shareholders are bearing these costs today.

At the same time, its core automotive sector is experiencing some volatility, something that was not expected six or seven years ago. Deliveries have fallen by about 2%, and in Europe, Tesla is rapidly losing market share to rivals such as Volkswagen, a long-established car company.

So, Tesla’s entire story now rests on three big future bets. First, robot taxis, which are self-driving cars capable of generating profits around the clock. It's a small-scale service starting out, but regulators have opened an investigation into it.

Therefore, there are real risks , and its driver assistance program is also under scrutiny in Europe before it can expand there.

Secondly, Optimus, the humanoid robot, is a potentially huge market. Although Elon himself acknowledges that production will start slowly because almost every part has to be manufactured from scratch.

The real test for Optimus will not be how many robots Tesla can manufacture, but whether each one generates more value than it costs to run.

Third, Tesla Energy, the battery storage business, is experiencing remarkable growth. Although its profit margins there have decreased from about 30% to 20%.

On the other hand, Tesla's services business , which includes charging, software, insurance and the like, jumped by about 50% to reach $4.6 billion, even as it poured nearly 50% more into research and development compared to last year.

So, this is the positive outlook for Tesla, from a purely commercial standpoint. Firstly, the company uniquely combines manufacturing, software, and energy under one roof. Secondly, if self-driving technology is truly successful, every car on the road will become a source of profit for years to come.

But the essential requirement is that it be truly safe and economical per mile, not just impressive in a demonstration . Third, its battery sector has long-term growth prospects in light of the world's race to store more energy.

Now, let 's talk about the negative side. Firstly, competition from regular cars quickly catches up and narrows the gap. Secondly, the massive spending on artificial intelligence may continue to reduce profits for years if the desired results do not materialize .

Third, quite simply, the company is running a very large number of expensive and untested projects at once: self-driving taxis, robots, batteries, and electronic chips. If several projects overlap, one of them must be sacrificed .

In terms of value, the merged company will consist of approximately 40% Tesla and 60% SpaceX.

Tesla's batteries and SpaceX's AI data centers, which consume enormous amounts of energy, are perfectly compatible with each other . the Starlink network can connect Tesla's future cars and robots almost anywhere on Earth .

mergers make it dangerously easy for successful companies like Starlink and Tesla Energy to finance loss-making projects without anyone being held accountable. government regulators who might confuse SpaceX’s sensitive defense business with Tesla’s massive presence in China.

they already capture most of the benefits through simple contracts such as Megapack sales and the joint chip factory. Why take on all the risks and complications of a merger if you can achieve the gains without it?

both stocks are priced based on huge future expectations. Tesla shares are trading at an astonishing price-to-earnings ratio, according to a simple metric. Guys, that's nearly 400 times last year's profits, which means investors are paying today for self-driving cars and robots that haven't even been made yet .

here's Tesla. Now, many will look at the stock price and think that is the price of the company. This is incorrect. The true price of a company is its market value, which is the product of the share price and the number of shares.

for a car company , that's an excellent figure . The value of the company less its market value equals $20 billion . This is their total debt. They generated $5.76 billion in free cash flow last year, less than four times their debt level. This is great, it's a good level.

The only metric I do n't like, which has been good for the past five years, is return on capital, i.e., the return they get on the money invested in their business , which was 10% annually for the past five years , but has dropped to 3% in the last year.

Now, as you can see, the profits of the past five and ten years have been promising. The profit margin over ten years was 7.5%, and over five years it was 9.7%. Last year, it was only 3.7%.

The company has struggled recently, and this is something we've talked about in past years regarding how people will eventually get over the Tesla issue.

This is a five- year chart for Tesla. Guys, five years ago, the stock price was $400. Today, it is approximately $400 per share .

You might say, " Well, the company has suffered." Okay, let's take a look at the income statement. The company achieved sales of $104 billion in the last 12 months. Five years ago , it made $53 billion.

You might say that sales the previous year were $31.5 billion. So, sales have at least doubled, and possibly tripled. This is the difference in the company's performance.

This is what we were talking about, which is that people will not love a company forever. Eventually, enough buyers will enter the market so that no new buyers remain, or circumstances will change, and the stock price will remain stable for a while.

That means five years. Five years, guys. The share price barely rises in it. It is true that it shows a 43% increase because it has risen dramatically. But in about a month , it will turn into a negative return for the next five years.

Yes, in November. On November 1st, it will turn into a negative return.

Now, folks, there is a slight increase in the number of outstanding shares. Guys, I don't blame Tesla. If the stock price is significantly overvalued , that's a problem . Over 90% of Tesla's revenue currently comes from cars.

It is currently a car company with great potential for something else.

The average number of car sales is 0.5 per one-time sale. This means that if a car company generates $100 billion in revenue, its market value is typically between $50 billion and $100 billion.

This scale is located here. Tesla's market value is 13 times its sales. Therefore, this means one of two things: either the investors are overvaluing the car company, or they are overestimating its future potential .

Neither of these things is a good indicator for the company.

Okay, let's go back to the eight pillars. Everything else is verified except for the evaluation. Cash flow is increasing even though the past five years have been difficult. Net income is increasing, revenues are increasing, and the return on capital is good.

These are all good indicators. Tesla has many positive factors. Its sales have slowed down recently, but that's okay.

Well, the analysts are very optimistic. They expect a profit of $1.68 by the end of this year, rising to $9 over the next four years. Assuming Tesla 's price-to-earnings ratio is 20, the stock price will be $180 in 4 years, assuming no dilution.

Currently, the rate is $370. That's a very high price, in my opinion. Unless you think otherwise . Unless you're like Kevin Matt and say, "No, if the current price-to-earnings ratio is 8 billion, then that means it's a deal at 1 billion times the earnings."

If you think this way, then subscribe to our channel. I have a lot to offer.

Guys, regarding revenues, their revenues have more than doubled, from 106 billion to 240 billion. This is truly tremendous growth . It may be difficult to realize now, but analysts are optimistic about it.

Now, we have reached a critical point. It's time to determine the right price to buy Tesla shares. I'm not going to lie to you, when you buy a company, you're buying its future.

So, I have to take into account self- driving taxis, robots, and all that stuff. The question is: What is its price ? First, I will conduct a 10-year analysis. My first question is: What are the revenue growth projections for the next ten years?

Guys , I've overestimated my expectations. 10%, 20%, 30%. I want to show you how crazy that is. They have achieved 20% annual growth over the past five years . That's tremendous growth for another ten years.

Next, what is the expected profit and free cash flow over the next ten years? I have done other calculations, which are 12, 18 and 24 times. Remember that this is the lowest number they have ever set, and they have never achieved it before.

Therefore, I am very optimistic about everything in the future. I am presenting Tesla with numbers they have never seen before. Keep this in mind when considering the price.

Next, what price-to- earnings ratio or price-to- free cash flow ratio would I assign to this company after 10 years? I believe Tesla has enormous growth potential. It may even outperform the average stock in the market, which typically trades at between 15 and 17 times long-term earnings.

Therefore, I set 18, 22 and 26 times the profits.

Finally, an intrinsic value return of 9.5% with no margin of safety. What is the market value of this company? This is not what I want to pay, and it's not what I think you should pay.

What is its market value? Remember, guys , when it comes to stock analysis tools, it’s very important that you do this a lot, so that you can sit down and make good assumptions about the future.

So, I pressed the analyze button. The stock price is currently 380. I have a low price of 100, a high price of 1200, and an average price of 370. So, guys, I thought I made very optimistic assumptions about the profit margin and growth, and we still consider the stock overpriced based on my average assumptions.

For me, it is difficult to predict what this company will achieve in the next ten years. Therefore, I try to avoid it, but for you investors, it may work because the stock was overpriced 5, 6, or 7 years ago, or even 8 or 10 years ago, and then its price gradually increased. So, it's still possible for it to happen again.

Remember, Tesla shares were trading at 13 times their sales, and I considered that excessive.

If I were a shareholder in Tesla and they talked about merging with SpaceX, I would be very concerned.

I will use the same price-to- earnings (PE) ratio used by Tesla, which is 18%, 22%, and 26%, with a yield of 9.5%. One is trading at 400 times its earnings, and the other is incurring heavy losses, and I have set a true price for both of them.

if you bought Tesla or SpaceX shares this year , ask yourself: did you know the right price before buying? Or were you deceived by the story? Be honest with yourself about this.

This is the trap that Elon Musk's companies face. It is so exciting , and its story is so exciting, that it is easy to forget the price. But when you pay the wrong price, even the best companies become a bad investment.

What is the value of having clearer information about the value of Tesla and SpaceX before investing a single dollar in them or even before spending a single minute researching them?

I think he very much wants to own the largest company in the world, one company. I don't think he's enthusiastic about the idea of three different companies. I think he wants one huge company.

Will he try to merge them all? If I were a gambling enthusiast, I would say yes. But that doesn't necessarily mean it will happen, and I think there are many laws and regulations that will oppose it.

In fact, I think Tesla should split its budget between cars and all the other products it manufactures. Therefore, I am not in favor of integration. Then, I'm sure everyone saw on Friday their announcement of a jet-powered roadster and all those features that enable it to fly upside down and flip over.