Spend money on Alibaba or Tesla?

Somebody requested me lately would I think about investing in Alibaba or Tesla now that their inventory costs are a lot decrease.

After all, for very long time readers of my weblog, it’s in all probability straightforward to guess my reply. 

Singapore has enough alternatives for me and investing in Singapore fits my objective.

I’m additionally at an age the place I’m much less occupied with pleasure and extra occupied with stability. 

Sure, AK is a younger senior, as coined by PM Lee.

Nonetheless, every now and then, the thoughts forgets the physique’s age.

So, I purchased into Cling Seng Tech ETF a couple of years in the past and I blogged about it too. 

I used to be fairly clear that I used to be buying and selling the ETF because the ETF didn’t pay a dividend. 

After a couple of rounds of buying and selling, my present smallish place is at such a low value that I’m OK with holding on to it as a speculative place. 

After all, by holding on to the ETF, I’ve an publicity to Alibaba too. 

To be fairly sincere, if I need to select, I might put money into Alibaba and never Tesla.

From a valuation perspective, nicely, standard valuation perspective, Alibaba is pretty valued and a few may even say it’s undervalued.

It’s fairly straightforward to make a case to put money into Alibaba now if not for coverage threat in China.

As for Tesla, I blogged about it earlier than a yr in the past when its inventory value plunged 10% to $163 per share in a day.

On the time, Tesla was buying and selling at a PE ratio of some 45x even after the worth plunge.

To me, it wasn’t mouth watering nevertheless it was eye watering.

I stated again then that if Tesla was the expansion firm individuals stated it was, then, maybe a 45x PE ratio was acceptable.

Nevertheless, at a PE ratio of 45x, Tesla must develop its earnings at 45% a yr to have a PEG ratio of 1x which might make it pretty valued.

To be truthful, taking a look at business friends, a PEG ratio of 1.5x is perhaps extra affordable which meant that Tesla ought to develop at 30% a yr to make a PE ratio of 45x acceptable.

Was Tesla rising its earnings at 30% a yr? No.

On the time, I stated a extra affordable value for the inventory could be round $80 a share.

With its inventory value at $147 now which is far decrease than the place it was a yr in the past, Mr Market may very well be slowly waking as much as the fact.

Alibaba might need to face coverage threat however Tesla has persona threat amongst many different dangers.

Persona threat?

The erratic and hubristic Elon Musk.

I bear in mind somebody asking him about BYD a couple of years in the past in an interview and if he was involved with the competitors.

Elon sniggered and stated, “Have you ever seen their automobiles?”

Properly, see who’s laughing now?

If AK can chortle to himself, so are you able to.

Associated put up:
Tesla’s outcomes and valuation.