Tesla (TSLA) is perhaps the greatest Bull/Bear debate in the history of the stock market. The discussion of how much Tesla is worth has now been raging for years.

The Bulls say it will be worth multiples more than its current value. The Bears say it is a cash-burning machine headed toward bankruptcy. Talk about two opposite ends of the spectrum. There is a general flaw in both of these arguments, and 2017 is likely going to decide which is right and which side is wrong. 

Let's get back to the flaw in the Bull/Bear argument. The Bears will say TSLA is a cash-burning machine headed to bankruptcy. True, the company does burn lots of money, but so did Amazon (AMZN) for many years. The Bears will argue that electric vehicle demand will be picking up and TSLA can't hold its market share. Right now, more EV cars are coming to market. The Bears will argue that Tesla can never build 500,000 Model 3 cars for $35,000 a year and the company will lose tons of money per car. 

The Bull case is just as flawed, as they believe Tesla will revolutionize the industry. It's true that nobody spoke about electric vehicles 10 years ago. The Bulls think TSLA is making cars that will cut greenhouse emissions. Yes, but the electricity needs to be produced from somewhere. The Bulls will argue that Tesla is disrupting the auto industry. Yes, it is forcing automakers to roll out EV models en masse. 

Do you notice anything similar on each side of the argument? Autos, all it talks about is cars and the auto industry. Is Apple a phone maker or is it a tech company that makes phones? There's a big difference. A phone for the most part is a commoditized product. They are cheap to make and the barrier to entry seems pretty low. Or is Apple a tech company that makes software and an ecosystem that the phone serves as merely a gateway to the user?

Now, is Tesla an automaker like Ford, GM or Daimler? Or does it resemble a tech company such as Google, Microsoft and Apple? It is an important question; valuations are very different. Sure, Tesla makes a car, just like Apple makes an iPhone. Tesla is, and does, have an ecosystem, with its software that runs the car, the autonomous driving network with machine learning and over-the-air updates. When was the last Ford, GM or Daimler pushed out an autonomous driving update over the air?

Trying to value something that is changing the landscape of an industry is nearly impossible. The market has already told us what TSLA is worth: like it or not, $40 billion. Why? Because it has been trading in the same range for nearly three years. Knowing what it will be worth three years from now is the impossible task. I'd argue with anyone that tries to make a case for a Tesla valuation three years, let alone two years, out.

It is nearly impossible to predict any of the variables that go into any of the models used to figure these valuations out. None. Can you tell us what the risk-free rate will be? How many cars Tesla can produce? What will be the demand for the cars? One can't, so it is not even worth trying. (See also: The Impossible Task of Valuing Netflix.)

TSLA Revenue (TTM) Chart

TSLA Revenue (TTM) data by YCharts

Instead, one should focus on what information is presently at hand. TSLA's revenue growth over the years has been steady and seemingly growing at a faster pace, if one sees the curve on the chart above. Despite these gains, TSLA has been unable to turn a profit.

Often, analysts and investors get hung up with companies beating or missing analyst expectations because investing is all about expectations. In this case, despite beating or missing guidance and expectations, revenue growth has been consistent and stable. Revenue growth should be the main driving point when investing in a company like TSLA. Is the company consistently growing revenue at a faster pace, or is it stalling out and hitting stumbling blocks? Is the company consistently producing more cars and making more deliveries? TSLA has been growing all of these metrics regularly, which would indicate the company is producing cars into high demand.

One needs to move away from Tesla being an electric vehicle. TSLA is a technology company that is producing cars. These cars drive on four wheels and use a form of energy to move it forward and backward. A buyer of this car is likely not buying it because they believe they are saving the planet; they are buying it because they want to own it and they like driving it.

Ask a Tesla owner what they think of the car. The owner of a Tesla has likely been driving BMWs, Mercedes, Audis and Range Rovers for a good portion of their adult life. It says something about the quality of the product itself. If these cars were not viewed as a solid product, they would not sell, whether they were EVs or not.  A buyer of Tesla is not buying the car because they worry about the price of gasoline or for any other reason. They are buying it because they like driving it and typically don't really care if it is an EV or not.

The TSLA Model 3 is expected to start at a base price of $35,000, but of course, people will not get a car for that amount. Most people will opt for options just like they do on any car they purchase. A BMW 3 Series starts at about $31,000, but by the time you get done with the options, the car is likely to run over $40,000. A Model 3 will be competing with the BMW 3, Audi A4 and Mercedes C line-up of cars, not the Chevy Bolt. 

As for the Model S and Model X, investors seem to think that perhaps TSLA has hit a wall because guidance for the first half of 2017 is flat from 2016. If it is likely not the case of stalling demand, it may be a case of TSLA trying to focus on the Model 3 ramp and not wanting to set expectations for the street too high.

How much is a company worth that is currently on an exponential growth curve, and about to do the impossible? It looks we are about to find out. Odds are the answer is: a lot more than its current value.

Michael Kramer and the clients of Mott Capital Management, LLC own shares of TSLA. Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request the advisor will provide a list of all recommendation made during the past twelve months. Past performance is not indicative of future performance.

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