Liam Denning, Columnist

Tesla’s GameStonk Valuation Needs More Than This

Even for this wild era, unbelievable scenarios are priced into the stock.

January 27, 2021 at 11:25 PM UTC

Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited the Wall Street Journal’s Heard on the Street column and wrote the Financial Times’s Lex column.

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Photographer: FREDERIC J. BROWN/AFP/Getty Images

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Tesla Inc.’s 2020 results are in. There are half a million more electric vehicles out there. There are profits. There is free cash flow. There is a $19 billion cash pile. These are all good things. And in anticipation of all this, the market has already bumped up the market cap a bit.

At $721 million, Tesla’s GAAP profit is more than accounted for by $1.6 billion worth of regulatory credit sales, even if you adjust those for tax2. Still, it’s Tesla’s first annual net profit ever, and that’s not nothing. It’s just that, next to that $819 billion market cap, it does look a bit small.