Apple Buying Tesla Is the Biggest Joke I've Heard in a Long Time
NEW YORK (TheStreet) -- "Buy the rumor, sell the fact" is an old adage on Wall Street for a compelling reason -- once an event happens, it's already priced in. However, investors should remain cautious about the rumor of Apple
"There are no coincidences on Wall Street" is another old Wall Street saying more appropriate to Tesla's latest buyout rumor. Tesla reports earnings after the close on Thursday and the consensus estimate is 18 cents a share. Don't think for a second it's just coincidence an alleged meeting between Apple's acquisitions chief and Elon Musk, occurring about a year ago, is plastered all over the news right now.
Keep in mind that Tesla's valuation doesn't come from earnings or dividends but anticipation of possible future earnings from expected growth.Based on current sales and profits, the stock is worth about $20 if valued as its peers. If the disparity between current earnings and future expectations appears wide, it is.
At around $205 a share, Tesla's market cap stretches into the $25 billion range. For perspective, General Motors
In other words, Tesla needs to grow revenue about 80 times the current size for its shares to be similarly priced to its peers.