Tesla Bear Wonders If Wall Street Is Looking For ‘New Narrative’ Of Energy Hype Because EV Giant’s Stock Price Is ‘Too High’
As Tesla, Inc.‘s (NASDAQ:TSLA) core electric-vehicle manufacturing business goes through a downturn, bullish analysts began to flaunt the company’s energy storage business as the next big revenue driver.
But GLJ Research’s Gordon Johnson on Monday questioned the merits of this thesis.
What Happened: “How, possibly, is TSLA’s battery assembly business, with ~20% gross margins and ~$5.7bn in annualized revenues, worth hundreds of billions of dollars when… global battery manufacturing leaders, like LG Chem, trade below <1x revenues? Serious question?” Johnson argued.
The analyst noted that LG Chem currently trades at 0.8 times its revenues on a “Total Enterprise Value” basis. He added that the annualized revenue of Tesla Energy is currently at $5.7 billion, and both Tesla and the South Korean company have similar gross margins of around 20%.
Applying the same 0.8 times multiple to Tesla Energy revenue gives $4.6 billion in total value or $2 per share, Johnson said.
“So, WHY are the lion’s share of journalists and financial analysts giving this segment >$200/shr in value, or ~100x what it’s worth, ASSUMING, again, the same TEV/Sales multiple as industry leader LG Chem,” he wrote on X.
“Is it b/c the stock price is ‘too high,’ and thus a new narrative is needed?”
Johnson also noted that Tesla buys a majority of its cells from Panasonic, China’s CATL, and LG. The in-house 4680s the Elon Musk-led company is making is a “manufacturing disaster,” with no meaningful advantage in energy density versus the older 2170Ss at its peak level, he claimed.
Even if Tesla successfully makes its own 4680 cells, other manufacturers can make and sell them to anyone, the analyst said. He noted that BMW announced it would buy them from CATL and Eve.
