Texas Pacific Land is severely overvalued
The bear case argued for Texas Pacific Land is that its $35 billion market cap vastly exceeds the underlying net asset value of its land and mineral rights, which are estimated to be worth only $7 billion.
The argument
The guest argued that the stock's run-up since entering the S&P 500 is driven by speculative narratives, such as Permian data center development, which will not meaningfully impact a $35 billion valuation. He expects the stock to eventually trade at a discount to NAV again, leading to a brutal correction.
The thesis, stress-tested
✓ What validates it
- ✓The stock price reverting toward the guest's estimated $7 billion asset value
- ✓A slowdown in Permian land transaction premiums
▸ Risks discussed
- ▸The stock has strong upward momentum and has gone against the short position for a long time
- ▸Speculative enthusiasm around Permian land monetization could persist
Hear it yourself
"But the assets there worth $57,000,000,000, and this company has historically traded at very close a a premium a slight premium or slight discount to NAV. I am sure sometime over the next ten years, it will trade at a discount to NAV again."
00:00 / 00:19
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE