 Good day, fellow investors. Tesla was one of the stocks that you required me to analyze in the 20k subscriber video. You can find all the other stocks that we have analyzed from the list in the description below, the links. So, Tesla is a very intriguing stock, but there are three ways to approach investing in Tesla. You can trade on the tweets, you can be a very, very long-term investor in Tesla looking at a long-term going-to-mars picture, and you can be short Tesla. However, on trading on the tweets, that's really something crazy. As you can see, the volatility with Tesla is crazy, 13% down last week, the next day 17% up, as all what's going on with Elon Musk evolves. So, that's really something crazy, something very difficult to grasp, expensive to do, and that's something I'm not going to touch on. I'm going to touch on the long-term investment and on the short thesis, and then put that into a perspective to see what is possible to do, how to invest, and how to get, how to put Tesla as your portfolio exposure, how much Tesla should you own. These are the topics. We're going to go through Tesla's business model, how Musk's promises always hit reality at some point, the competition, Tesla stock valuation, am I short Tesla or long Tesla? We're going to look at the option chain to see what are the prices of being long and short, how do I invest in the electric vehicle trend, and then whether we are going to cover Tesla on this channel or not. We are covering Facebook, and then there will be an update on that in two days. So, let's start by discussing Tesla's business model. Tesla business model is a very effective model to grow revenue fast. Let me explain what I mean. If I would want to grow revenues fast, let's say I buy Apple phones for $999 and then packaged all the same, I sell those phones for $852. I bet you my revenues would grow extremely fast, and that's exactly what Tesla has been doing since like ever. If we look at the financials over the last four years, the sum of the revenues is $26 billion, the sum of the expenses is $29.8 billion, which means that Tesla sold yes a lot of cars, but at a net loss of almost $4 billion, which is the difference between my iPhone sales. The point is that Tesla is producing yes, but everything that Tesla does is at a loss, and many think it will turn in the future, there will be a profit, but I think the main reason for those losses are Elon Musk's illusionary efficiency production expectations. He thinks that everything will go smoothly, whatever he plans, whatever his ideas are, but whenever you do something, whatever, changing a bulb, that's going to take a lot more time than you have initially planned and it's going to be more costly. So that's something Elon Musk doesn't see, doesn't understand and he promises efficiency, he is capable of getting huge capital amounts on that efficiency, but unfortunately it doesn't deliver when it hits reality. So from Bloomberg, Tesla's goals, they tracked 54 projects, 20 of those were completed and 16 of 54 were late. The latest project was the 500,000 yearly production in 2018, which was announced in 2016, just to raise more capital in 2016. Of course they will not hit that very unlikely, so that's another missed promise. Other recent projects are all mostly running late, hence free trip across America, nine months, Tesla network, nine months, two to four new giga factories, nine months, 350 mobile service vans, nine months, supercharger network across Canada, nine months late, model three production, 2500 a week, okay, this is a little bit older data, but then it was still six months late. First 100,000 model three deliveries was nine months late, model three all wheel drive was again nine months late, solar roof tile in Tuscan slate, three months late, model three production of 5000 a week was nine months late, 35k base configuration of the model three, 10 months late, add 100 new service centers three months late. Of course this is the best, obviously, but let's look at the future, will Elon Musk deliver on his promises or not? Gigafactory reach full production, target 2018, a tripling of superchargers, target 2018, model three production of 10,000 a week, target 2018 revised, now it's uncertain, pickup truck unveiling mid 2019, I'm sure he will unveil that correctly because that will be needed for more capital raises. Autonomous cars are capable of letting drivers sleep, okay, 2019 target will see Tesla semi scale production, he will put up manually some items for sure, model y launch, yes, for capital needs for sure, solar Gigafactory produces one gigawatt annually, we'll see one million cars a year, target 2020, we'll see, Tesla value that 700 billion in 2025, yes, for sure, etc, etc. Now on one hand we have promises and on the other hand we have reality, Tesla is a car company, every other car company is talking about autonomous drive, digitalization, whatever, just look at BMW, Audi, Mercedes, everything what they are doing Toyota, same as Tesla, so at the end Tesla will be is a car company and if they deliver on their promises, we can expect their margins to be in line with everybody else's margins in line with a car company. Further Tesla will require huge amounts of capital to reach the production, the production scale, everything that other car manufacturers already have, which means a dilution to oblivion for current shareholders. Another concern I have for Tesla is that we are in the late part of the economic cycle and buying a Tesla as a car now is pretty cool, especially if you lease it on a company car or something like that, but late part of the economic cycle followed by a recession when demand for such cars really dries up, especially for the luxurious higher-range cars and then really car companies hit a wall. Don't you ever wonder why all other car companies have extremely low valuations because of the risks of the next recession. Let's take a look at Daimler, price to sales 0.45, forward dividend yield 7%, car manufacturer 7% dividend yield, price earnings ratio 6, market capitalization 67 billion, just a bit above Tesla, price to book 0.93 on a market cap of 67 billion. And the funny thing is that Daimler is preparing to compete with Tesla by investing 10 billion euros in electric vehicles. They will have 140 electric alternatives by 2022 and also a range of completely electrified vehicles by 2022. Now, why didn't established car manufacturers compete with Tesla before? Why didn't they start making those electric cars sooner? Because they went waited for confirmation that the market is ready for electric cars. They didn't want to invest billions into losses like Tesla did before they got sure that the market is there and now they are ramping up production and now they will deliver when the demand is there. Many companies have tried in the past to launch an electric car vehicle, but the market wasn't simply ready. Like it wasn't ready when Tesla launched, now with the improved technology it is getting ready. The economical electric vehicle already there in 1914, so electric vehicles are not something revolutionary, it's just that the technology allowed them to be competing. 1990s there were other attempts, Riva, GM had also EV1 or something, so not a lot of range, not a lot of quality, so it didn't gain traction. So let's put all of this into numbers. Let's evaluate Tesla as a stock. Let's say that Tesla hits their 1 million vehicle target in 2020. That is 30% of what Daimler is doing now. As they have both cars, Tesla semi, luxury trucks, buses, whatever, let's assume proportional revenues and earnings. 30% of 164 billion euros or 190 billion dollars is 57 billion of revenue in 2020 for Tesla. With the same net profit margin of 6.6%, Tesla's profits in 2020 would be 3.7 billion. A tax evaluation of 6 to that, like Daimler has now, and you get to a 2020 market capitalization of 22 billion, that would give you a stock price of 140 in 2024 Tesla. So 130 stock price to Tesla's plans. Okay, that's a good stock price with Tesla and I think 22 billion market cap is good. However, that's if Elon Musk reaches all his targets efficiently, smoothly. That will never happen. So let's take a 50% cut on that because of inefficiencies. So from 130 we are down to 65 as a stock price or better to say 11 billion market capitalization. And then for the stock price, he will need a lot of capital to finance all his projects as his production is not profitable. He cannot do it sustainably, finance himself from cash. Let's expect another 10 billion of investment in the form of capital like Daimler is investing and like everybody else is investing in the electric vehicle trend. So that's on an 11 billion market cap. That's a delusion of another 100%. So my fair value stock price for Tesla ends up at 32.5. So 32.5 is my fair value for Tesla. Everything else are fair retails for the snowflake generation. I'm sorry to say that, but that's how it is. Now you would wonder, am I short Tesla? Well, not because one thing is finding an overvalued stock wine. Another thing is shorting it because the shorts are usually expensive. As we have seen in the Tesla stock price charts, the volatility is extremely high. So if you really want to go short, you want to know the direction you want to be right on the timing, the best way is always to buy a long term put. But if I look at those long term puts in an option chain, those are extremely expensive, which tells you what the market thinks about the risk of Tesla's stock. If I look at Tesla's option chain for the 2021 near the money put, it costs $94.50. That's about 40% of the current stock price to go short. So if, let's say, Tesla's stock drops to $120.23 and I buy that put again in 2021, I would not even break even on the cost when you had the cost of my money. So extremely expensive to go short Tesla in a normal way. Just to compare how risky Tesla is, even Amazon's on a very extreme valuation. Amazon's put option costs 14% of the stock price for the same strike date does half of Tesla's put option price. So too expensive to short Tesla, too expensive to buy long, too risky, better leave it aside. But this is just my opinion. This is how I see the world of investing. You might like it. You might not like it, but I'm sure that those who believe in fairy tales, the mambo jumbo, Elon Musk, Lula Palooza, please bring on the heat. And now to more serious things, how do I invest in the EV trend? Because I think the electrical vehicle trend will be massive in the future, but there are different options to invest in and I'm a more picks and shovel guy. Let me explain. In the gold rushes, in the 1800s, some minor would make money, some would lose, some would drink it all, but the most efficient, most productive, best return on capital was the guy that was selling the picks and shovels to mine. He was making the money, no risk, low risk, extremely high return investment in such an environment. So I prefer to invest in those things. So I prefer in the picks and shovel investments, the physics are clear, the Newton laws are clear, you need know what you need for the industry to boom and one way to cheaply get exposure to the industry now still is of course, nickel. And later in playing with the cycle and commodities copper, but that's some other story, not for this video, you can check more on my stock market research platform. Before ending, I'm not going to cover Tesla on this channel because my price is 32.5, the difference between 32.5 and the current price of 300 is sentiment related to Elon Musk's aura. So that's something I'm not capable of analyzing, just speculation. So no point to cover this stock. However, an update on the stock we're going to cover Facebook will be coming on Thursday. So I'll see you tomorrow in another video talking about also some crazy stocks, but with price earnings ratio of 227, which is the Chinese real estate market. So I'll see you tomorrow and then the day after with Facebook. Hope you enjoyed this video, like it, dislike it. If you hate the idea, please dislike it and comment, share your insights. And I'll see you of course in the next video.