Is this just an investor looking out for his fund or doing his duty pressuring companies to get their act together? The two examples, GM and Tesla, certainly seem to have a "wrong" stock value.
- Market cap: 50B
- Expected return on capital: 10%
- Expectable profit margin: 10%
- Expectable average unitary price: 50k
50B*10%/10%/50k = 1 million vehicles.
Tesla is selling about 80k vehicles yearly (at about double the above average sales price): http://www.ibtimes.com/tesla-motors-tsla-1q-2016-sales-14820...
The current valuation requires an increase in volume of five to ten times. Given the sales volume evolution of the current product lineup and the entry in a lower segment, it's definitely not out of reach in a five year horizon. Add up to five years to pay accrued debt (it should amount to about 10B before Tesla reaches steady state in the known product lineup).
All numbers are order-of-magnitude precision, but they surely do not point to a «certainly "wrong" stock value».
The market for ~$70,0000 sedans is not so great that increasing volume 10x is reasonable, within 5 years.
The margins for ~$30,000 sedans are lower then 10%.
So, volume may go up 10x, but returns might not.
Of course it is, and it will surprise no one but the eternal bulls.
Tesla has nailed the tech, but auto manufacturing is big and they're new at it (despite how many robots they've bought). You can see the prices at which the other manufacturers are having to subsidize their small EVs and still lose money. Tesla threw out the $35,000 years ago and have stuck with it.
So, it's really no surprise that the price will creep up; the real question is: how big is the market for a $50k EV? Is it as large as people are assuming? Can they make money on 250k cars annually?
Well as a fund manager his #1 concern is maximizing his fund's investment returns.
He couldn't care less if GM/Tesla gets their "act together".
TSLA definitely seems over-valued, but the market is betting on the possibility of Tesla massively disrupting combustion cars, which explains why TSLA stock is soaring while GM stock is stagnating/flat.
[1] https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company