Tesla Motors (TSLA) CEO Elon Musk has quoted the legendary investor Warren Buffet who famously analogized the stock market to a person with a “manic-depressive” disorder.
In an interview on Monday with CNBC, Musk, who was speaking at the U.K. launch of the ‘Model S’, said:
“I try to avoid watching the day-to-day share price, because it’s somewhat distracting…People try to really read the tea leaves, even though there’s really not enough information to make conclusions. And then they’ll get exuberant, and then depressed. I mean, as Warren Buffet said, dealing with the market is like dealing with a manic depressive.”
Musk also said there was a lot of expectation priced into TSLA and the company needed to execute well and outperform the market for the next few years in order to justify the stock’s pps.
Musk is right. Based on next year’s current estimates of $3.17, Tesla trades at a multiple of 65X next year’s estimated earning. Any time you have a company trade with a P/E that high, the market’s suggestion is that it expects long-term sustainable and rapid growth.
“I’m feeling like we probably will,” he said. “I don’t even know what the value is right now…I’m just guessing because I haven’t seen the share price in a few days, I think it’s probably not too crazy.”
Tesla was last trading Monday at $207.35, well off its $265 Feb. 26 high. Nevertheless, shares are still up nearly 38% since Jan. 1.