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Is now a great time to buy the dip, or does the price have further to fall?
Most investing analysts agree: the stock remains overvalued, even after its recent tumble.
Heres why you shouldconsider selling your Tesla stocks.
Cash Flow Ratios
By every conventional metric, Tesla looks overpriced and that starts with cash flow.
Teslas price-to-cash flow ratio is an astronomical 65.33, as reported by MarketWatch.
For context, General Motors (GM) has a price-to-cash flow ratio of just 2.35.
The question is, can Teslas future cash flows grow enough to justify a $766 billion valuation?
Right now, Tesla is selling for 250X free cash flow.
Thats hard to get around even if cash flow grows at 20% per year.
P/E Ratios and Other Metrics
Currently, Teslas price/earnings ratio sits at a dizzying 122.64.
Compare that to a historical average for the S&P 500 of around 15.
Tesla currently sells at a price-to-sales ratio of 8.95 and a price-to-forward earnings ratio of 88.02.
These are astronomically high compared to Ford and GM.
Ford currently sells at a price-to-sales ratio of 0.21 and a price-to-forward earnings ratioof 7.15.
Similarly, GM currently sells at a price-to-sales ratio of 0.29 and a price-to-forward earnings ratio of 4.20.
And it doesnt get prettier from there.
Protests against Musk and Tesla have exploded over the last month, both in the U.S. and abroad.
Protests aside, sales are falling off a cliff in Germany.
I believe the shares were dramatically overvalued even before therecent political firestormfacing Tesla, he said.
Reuters reported that Chinas BYD saw a 90.4% increase in car sales in February.
Poor Reliability
There are the stock metrics, there are the headlines, there are the narratives.
And then theres the product itself.
Teslas cars break down more than most of their competitors.
The latest reliability rankings by Consumer Reports put Tesla 17th out of 22 car brands.
Poor reliability, coupled with dated designs, has hurt Teslas brand in recent years.
Is There Any Case To Buy?
Some long-term Tesla bulls make the case that Musk and Tesla will eventually overcome all these hurdles through ingenuity.
To be fair, they do retain a few advantages.
The company remains a technology leader in EVs, artificial intelligence, and energy storage, said Chen.
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