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what's going on my fellow stock market Trader and investor homies it's your boy Kevin welcome back to touchdown trades I've been away from the channel for a little bit working on some other projects I've been involved in some real estate deals that have been taking up the majority of my time but we're back I may do some videos talking about those real estate deals that I've done over the last month or two but that's a different topic for a different day in today's video we're going to be breaking down Tesla stock one of the most polarizing names one of the most polarizing tickers in the entire Market you have one side of the case saying that Tesla is the next coming it's heading to a thousand dollars a share it's not only a car company it's not only one of the first movers in the EV space but it's also a tech company that is gathering all the this data it has such a bright future because of the development in this EV space and all the other projects they have going on over at Tesla you have the other side of the argument the bear case saying that this is an extremely overvalued car company that it should be trading alongside its peers like GM and Ford an evaluation should represent such and I've kind of steered clear of this argument I have traded it I have invested in it and I've made a decent chunk of change in Tesla however I have recently sold out of my entire Tesla position and I think Tesla stock is going much lower I believe Tesla stock is a big hard sell I'm not talking about a little insignificant pullback or correction I'm talking about a drastic price cut a crash if you want to call it that at and I'm not trying to spread fud or fear to those who are bullish on Tesla I'm just going to be presenting my case on why I think Tesla could be trading for 60 70 a share in the near future right now we're trading at 185 dollars per share and the market has already started to tell us that things may be starting to correct not only in Tesla but tech stocks in the entire Market as well we were trading up at 414 dollars per share just a little while ago and now we're trading down at 185 dollars per share we've cut more than half of the valuation from Tesla in just the last couple of months as of today Tesla has a market cap of a little more than half a trillion dollars 535 billion dollars on sales of 74 billion dollars Tesla's been growing quickly the numbers have been very good with net profit of 11 billion dollars all right we got cash per share of seven dollars and 21 cents we have a price to earnings ratio of 56 not very good and we have a Ford price to earnings ratio of 32 also not the best the Ford p e is a number that I like to look at that incorporates projected future growth on today's price versus today's earnings so it's telling us that Tesla is kind of overpriced not only today's earnings but tomorrow's earnings as well and here's where that gets dicey Tesla has been putting up these monster numbers and that's that Ford PE is projecting that they continue to put up these monster numbers that they continue to grow at the rate that everybody's expecting them to grow at and here's why that gets tricky Tesla has had the majority of the EV market share sent Inception it came onto the scene the first mover in the EV space took the EV Space by storm and it's had upwards of 80 percent of the EV market share but slowly and surely other competitors are coming into the space like expected and they're taking pieces of this EV market share ahead 90 plus of the EV market share today Tesla has about 65 percent of the total Market all right so 65 percent you got Ford with seven Kia with five Chevy four Hyundai four Audi 2 Volkswagen 2 rivien 2 and then you got some other manufacturers down here making up the rest of that pie Tesla's getting beat up here yes this was always going to happen but it's happening quicker and faster than we anticipated these competitors are going to come in they are going to be coming in with new designs that consumers like they're going to be coming in with maybe better range than Tesla has at a better price point than Tesla Tesla came onto this scene with this futuristic looking vehicle it was new and everybody wanted one now you have new competitors coming on with some would say better looking vehicles with comparable range comparable specs and there's going to be vehicles coming out at a cheaper price point Myspace was once the number one used social media app in the United States it died because people changed their taste and what they want and people will change their taste to Tesla if they don't evolve I'm sure they will I'm sure they're working on things and I'm not saying that Teslas won't be popular Vehicles five ten years from today but what I am saying that GM will have a popular EV car five ten years from today I'm also saying that uh Ford is going to have EV cars Hyundai Volkswagen rivian are all going to be players in this space and there's players that are going to be in this space that aren't even big yet that weren't don't even have one percent of the market share that will have some market share 15 years from today so that is my number one reason for think thinking that Tesla is overvalued at today's price Tesla the author goes on to say Tesla's position is changing as new more affordable options arrive offering equal or better Tech in production build given that consumer choice and consumer interest in EVS are growing Tesla's ability to retain a dominant market share will be challenged going forward the s p Global Mobility predicts that the number of battery electric name plates will grow from 48 percent to 159 by the end of 2025 at a pace faster than Tesla will be able to add factories and here is the second reason the Clown Shoe effect right when you're a company growing so quickly you have to build all these new factories to keep up with Demand right demand is off the charts you got 85 90 of the EV market share you're absolutely crushing it you're kicking ass taking names so you build all these gigafactories right well we just saw that these other companies are coming into the space they're taking market share so what happens if you build all these factories spend billions and billions of dollars billions and billions on these factories and then your market share starts to dwindle your market share starts to dwindle and eventually you have too many factories based on your market share based on your production needs and the demand for your vehicles it ends up being a situation like we saw in Detroit these factories start to shut down your growth slows to a halt eventually Market saturation steps in and you have clown shoes your shoes got too big for your feet you got an out ahead of yourself you spend too much money on these factories so it's really a thin rope it's a tightrope that Tesla is having to walk in order to keep up with demand make sure production is able to keep up with demand but also make sure that you're not getting out ahead of yourself all right so if you're looking to invest in a auto manufacturer my favorite auto manufacturer right now is General Motors hand down they make the best trucks their cars are decent for American-made cars and they're coming into the EV Space full steam ahead right let's look at their market cap 55 billion dollars 55 billion dollars is their market cap nothing to sneeze at but remember we just said that Tesla is trading at 550 billion dollars so for one tenth the cost for one-tenth the cost you can buy one share of GM stock that is insane to me now I know the Tesla Bulls are going to say well GM's not a tech company and Tesla is a tech company why not why not you don't think GM can use the same model as shutting down all these brick and mortar dealerships and setting up these remote spots like Tesla has you don't think GM is watching Tesla and trying to figure out how to cut out the middleman like Tesla has lower that overhead cost get into the EV space of course they are and of course they're gonna do it and they're coming in Full Throttle at a much cheaper valuation this EV game is still on the first lap of the race we've been maybe what 10 years now in this EV game there is still a long way to go Tesla may end up being Blackberry the Blackberry of the Eva space and we don't know yet who's going to be the apple of EVS but at one tenth the cost so if there was a 50 50 chance and I think GM and Tesla are 50 50 neck and neck on who's going to be the ultimate winner 10 years from now in this EV space if there was a 50 50 chance you're going to the horse races you're going to the track you're a betting man a 50 50 chance that horse a wins and horse B wins you put one dollar on horse a and if that horse wins you get two dollars back but if you put one dollar on horse B in that horse wins you get ten dollars back what horse are you going to be betting on I'm going to be betting on horse B for one tenth the cost you can buy GM it's a no-brainer look at the Ford PE remember Tesla's Ford PE was in the 50s I believe or the high 30s GM's 6.59 their price to earnings growth ratio 0.43 their price to earnings right now is six all right we're expect earnings per share this year growth of 54 per cent and 15 earnings per share growth over the next five years sales quarter over quarter are up 56 percent it is stupid growth at a stupid cheap valuation and it's held up better than the overall Market has it is going to continue to be a player in the EV space growing that market share year over year and Tesla is overvalued so what do we do what do we do with our Tesla stock the first thing we do is we go to the link in the description sign up for MooMoo and get up to 15 free stocks I think they can be valued up to like 10 grand or something crazy like that it's the broker that I enjoy using and it is giving the touchdown trades Community free money if you sign up with the link in the description all right so Tesla what do we do what do we do what do we do if we go to the weekly let's back off to the weekly we can see that we've already corrected a good bit there's gonna be there's gonna be some Pops in this there's gonna be some pops and I think we're gonna see something like this overall trend is down with some drastic volatility mixed in so what about what am I going to do is I'm going to use some options I'm going to be selling calls selling calls way up here and buying calls above that that's called a vertical spread and what that does if the market stays under the price of the call that you sold you keep the credit at the time of expiration it's a little less aggressive than selling or buying puts or shorting the underlying stock and you're more protected however you're also basically the casino right somebody's buying call options way out of the money hoping that Tesla has this massive move to the upside and even if Tesla even if I'm wrong and Tesla starts to Trend higher I still have a high probability of making money on this trade because I'm becoming the casino I'm selling these call options that are way out of the money and I'll sell that lottery ticket to the degenerate who is expecting a 30 move in the next two months two weeks two months two years to the upside doesn't matter the probability says that Tesla will be under these call options that I'm selling at the time of expiration all right so that is my thesis let me know in the comments section so just as a summarize to summarize it a little bit I think Tesla is a great company great company I'd be a buyer probably right now around 70 bucks I'd be a buyer that's still a huge drop right but I'd be a buyer about 70 bucks I think it's a great company I think they're going to be around a long time I just flat out think they're overvalued as more competitors come in and start clipping off market share also I didn't even mention that the CEO Elon is now running Twitter a lot of his focus is on Twitter uh probably the majority of it because he just spent 44 billion dollars billion dollars and you know he's pissed a lot of people off he's pissed a lot of people off in super liberal people who don't like what he's doing with Twitter may end up not buying Tesla because of what he's doing I think that's going to be short-lived and it won't matter in the long run but it is a a note to to keep in mind I love every single one of you guys let me know what you're doing with your Tesla in the comments hit that like button I'll catch you in the next video until next time
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