The analyst in question, David Tamberrino, ranks 10,337 out of 10,667 on TipRanks, meaning he is one of the worst analysts and has been wrong all the time. Link: https://www.tipranks.com/analysts/david-tamberrino
Those who keep repeating that Tesla stock is "overvalued" should understand that a stock's "value" is based on the current value of all future cash flows. Ford and basically all the other incumbent car companies are generating profits now, but are stagnant and waiting to be disrupted. Meanwhile Tesla's revenue is $7B last year, will be $10B+ this year, $20B+ next year, and $60B in 2020. Which companies are overvalued and which would you rather own?
There's a reason Wal-Mart's top and bottom lines are both several times that of Amazon, yet Amazon is now worth twice as much as Wal-Mart. It's about growth and future addressable market.
"A few common fallacies about valuation of public and private technology companies: First, ask any MBA how to value tech companies, she'll say "discounted cash flow, just like any other company!"
Problem: For new & rapidly growing tech companies, up to 100% of value is in terminal value 10+ years out, so DCF framework collapses. You can run as many DCF spreadsheets as you want and may get nothing that will help you make good tech investment decisions.
Related to fact that tech co's don't have stable products like soup or brick companies; future cash flows will come from future products.
Instead, smart tech investor thinks about: A future product roadmap/opportunity, B bottoms-up market size & growth, C talent and skill of team. Essentially you are valuing things that have not yet happened, and the likelihood of the CEO and team being able to make them happen.
Finance people find this appalling, but investors who do this well can make a lot of money. Spreadsheet investing is often disastrous. Doesn't mean cash flow doesn't matter, in fact opposite: this is the path to find tech companies that will generate tons of future cash."
> ask any MBA how to value tech companies, she'll say "discounted cash flow, just like any other company"
No she won't. Discounted-cash flow methods have been around since the 1500s [1]. We've had the time to figure out it's good for predictable cash flows and bad for everything else.
I used to be tolerant of (non-financial) Silicon Valley's anti-intellectualism towards economics and finance. Sort of like the Graham-Dodd speculator-investor line [2], I thought it was a handy, if comically-simple, rhetorical device. I've become more suspicious. It seems like an easy way to deter reasoned economic discussion.
For growing companies without earnings, you work out from production capacity (for existing markets) or down from the expected customer base (for new markets). Nobody finds this appalling. Few venture investors use spreadsheets to make decisions, though many use checklists or spreadsheets to idiot test valuations, i.e. understand what assumptions must pan out for their thesis to hold.
> Instead, smart tech investor thinks about: A future product roadmap/opportunity, B bottoms-up market size & growth, C talent and skill of team. Essentially you are valuing things that have not yet happened, and the likelihood of the CEO and team being able to make them happen.
This thinking is what led me to buy GOOG(5x), TSLA(12x), NFLX(7x), YELP (ouch) and LC (oucher). I am buying what I believe the company will become, not what the company is. It's risky, and only a portion of my portfolio goes into these high-risk investments. Much of the rest is in mutual funds.
MBAs might do a little better in income investing for dividends. It's a totally different view, but investors need to understand that as well when it comes time to transition from growth to income stocks.
Very well said (to Andreessen I suppose). I started off with spreadsheets, but have evolved to this over time, even though it feels less rigorous and more intuitive. To some extent, I wonder how much investment banks suffer from the fact that they have to explain their picks with rigour\quantitatively forces them into missing the biggest payoffs which can only come from following sound intuition. And then, also if you are communicating your choices qualitatively you probably rely on familiar thematic 'stories' (big data! deep learning!) which leads to Thiel's aversion to stories.
> For new & rapidly growing tech companies, up to 100% of value is in terminal value 10+ years out, so DCF framework collapses
No, it doesn't collapse.
Mr Andressen seems to be defining Discounted Cash Flow very narrowly - as the the kind of spreadsheet an MBA creates where cash flow from each year is relatively predicatable.
His approach of simply making an educated guess about market size and team talent is still essentially DCF analysis.
> Instead, smart tech investor thinks about: A future product roadmap/opportunity, B bottoms-up market size & growth, C talent and skill of team. Essentially you are valuing things that have not yet happened, and the likelihood of the CEO and team being able to make them happen.
Isn't all this just a way to get an idea of future cash flows, though?
Tesla is a technology company that also happens to make cars. Ford is an automotive company, that also happens to make technology.
Lets talk about models - Tesla doesnt make a mass market car - even their basic sedan, starts at 35k - I can buy a nicely equipped Taurus, Fusion, Malibu , Impala, Camry or Avalon for less than that - and from a size perspective its far closer to a Prius or Volt (23k or 33k starting respectively).
Secondly, Brand Cachet - Tesla appears to be positioning itself from a branding perspective closer to where BMW or Audi does.
I'm more hopeful for Ford figuring out technology, than I am with Tesla figuring out how to be a really good mass market car company.
The reason I consider Tesla overvalued has to do with potential market share, as well as the traditional margin on cars - if they try to be a mass market manufacturer, I don't see Tesla capturing more than 10% of the (very crowded) marketplace nor do I see them easily besting the historic 5% margin most (mass market) automakers have, if they decide to be more like BMW or Audi - their margin could go up by a rather large amount - but their volume would go down by an almost an large amount... they might however have a bright future as a technology licensing company - that remains to be seen.
In short however, if you measure it by the "car company yardstick" its drastically over overvalued - if you measure it by the "technology company yardstick" however the numbers start to look a little friendlier. Consider though that the technology company yardstick seems to be mostly based on hype, rather than actualized returns basis.
Consider for a moment that Tesla isnt pioneering a new market here, it's trying to produce a better dohicky (thats really cool, but not revolutionary) in an already crowded market - this alone says that the technology yardstick shouldn't apply - you should instead measure it like its peers in that industry.
I hear very frequently that Tesla isn't a car company, it's a tech company. Mostly because they want to value Tesla stock like a tech company (very popular, high valuations, high profit margins), not a car company (cyclical sales, lower profit margins, heavily regulated).
But whatever Tesla is now, eventually if it sells cars it has to turn into a car company. It has to deal with things like logistics for spare parts, repair facilities, dealers (or whatever way they choose to sell cars). The fixed costs as Tesla goes on are only going to go up because of the legacy they are creating, as cars last a while (hopefully a long while), and need to be maintained/repaired, if only because of accidents.
Tech, on the other hand, usually means you don't have to worry about physical manufacturing. You don't have to worry so much about supply logistics, travel and transport costs, inventory, etc. Once you build the technology, at least with software it's easy to mass reproduce (especially with digital distribution and no physical media) at low overhead and sell at a reasonable price, sometimes direct to the user (higher profit %).
Now let's talk about another case study of a consumer discretionary company that uses tech a lot, Amazon. Amazon is leveraging tech to help the front end and the supply chain, to provide lower prices and easy shopping to people. By making a great website, they encourage people to find and buy more, attacking the "browsing at the supermarket" theory of impulse buying with their own impulse buys. They are using technology to do logistics cheaper, lowering prices to gain market share.
Tesla, and car companies in general, move a lot slower because people aren't buying cars every day. Do I think Tesla could turn into a great car maker? Sure.
But just because there's a new space (EVs) doesn't mean that current companies will own the space going forward, or even the leader today. Tesla is using its startup-ness to try to get there, but will they get over the hump of actually turning profitable while making cars? That's the big question, and if the futures earnings are in the stock price, that's a bet I'd rather pass. (but wouldn't short either)
> Tech, on the other hand, usually means you don't have to worry about physical manufacturing. You don't have to worry so much about supply logistics, travel and transport costs, inventory, etc.
Apple is a great case to bring this up. Like I said, "usually".
In this case, you managed to pick the stock that is trading currently at a 16.85 P/E, which is about half of GOOG and MSFT. It's even less than the S&P average (25.73). And Apple has a huge amount of cash in reserve overseas.
If you look at tech hardware, such as Apple, Intel, TI, TSMC, QCOM, they are traded at a much lower P/E multiple than software companies. nVidia and AMD are the darlings of that sector now and are pushing valuations, but the whole semiconductor sector has had a huge run up in prices.
And yes, I'd say that is partially do to having a supply chain, and a lot of physical capital, such as semiconductor fabs. But that is the kind of capital that you can more easily sell off than software.
Tesla isn't making just electric cars. Most people don't realize how disrupting self driving cars can be. If they can get an Autonomous car before anyone, that enough makes a lot of people switch over.
Not only that, they can roll out a large fleet of cars and provide transportation on demand.
This means eating lunch from Uber, Lyft, UPS, Fedex, Food delivery, Hertz, Avis e.t.c
When iPhone came out, Blackberry and Nokia assumed it was an iPod (music player) that could make calls. In reality it was a computer that could fit in your pocket and do 100's of things.
Tesla is not just an electric car company. It's a personal computer on wheels. Their software is far ahead of any other car company. Their hardware is a lot simpler and efficient.
>Tesla doesnt make a mass market car - even their basic sedan, starts at 35k - I can buy a nicely equipped Taurus, Fusion, Malibu , Impala, Camry or Avalon for less than that - and from a size perspective its far closer to a Prius or Volt (23k or 33k starting respectively).
I don't know if we're comparing apples to apples here. Volt and Prius are hybrid cars, meaning they don't have the same drive capability as a fully electric car.
Tesla's model 3 is a fully electric car for the same price as your average hybrid car and for less than you can get many hybrid models.
There are many electric cars out there like the Nissan leaf and chevy spark at a lower price point, but they don't have the performance of the Tesla and none of them have anywhere near the 346 km range that the Tesla model 3 is expected to have. They average out at around 150 km - which is good for most every day use, but not really useful for long trips. Tesla's long range combined with it's supercharger network makes it different.
A Tesla can really compete with and likely replace the average fuel powered car in range and performance. The average American family spends 1500 on fuel per year and keeps their car for about 11.5 years, that's 17, 250.00. Further a tesla will likely need less maintenance because you don't have things like coolants or radiators or oil changes. Things makes Tesla a bargain compared to fuel powered cars.
Yes Tesla has been positioning itself as a luxury brand and competing with luxury brands, but I don't think this was necessarily a choice but rather due to the fact that they can't currently make an EV cheap enough to compete with the mass market brands. Musk has always said his vision was a mass market car and I think in many ways the model 3 is what the companies real goal has always been.
An electric car driven 15,000 miles a year would still cost about 540 dollars per year to fuel, so that'd come out to a difference of about 11k - you're correct there about oil changes - but I wouldnt consider cooling systems - most cooling systems go 100,000 miles without maintenance, that also goes for most other major systems in the car - the exception being brakes and oil changes.
I fully acknowledge that electric cars appear cheaper to run - I'm expecting additional taxation to appear to null out some of the fuel cost differential however.
Bear in mind, I'm not bullish on electric cars - I think once the battery issues have been solved, and the charging network is fully deployed - and once the issue of charging for non-homeowners has been solved - Electric is clearly cleaner and better. I still think Tesla is overvalued for the market it's in (making automobiles), because of its limited potential to capture market share in that (very crowded) market.
Model 3 won't have a radiator, it does have a battery cooling fluid but it's not fair to think of that as automotive fluid because it doesn't have to be replenished.
>Tesla is a technology company that also happens to make cars. Ford is an automotive company, that also happens to make technology.
From 2007: "Apple is a technology company that happens to make a phone. Motorola/Nokia/Palm/Blackberry are phone companies that can easily copy Apple's technology and execute better than Apple since they know all about making phones."
Apple was an established technology company with a wallet fat enough to see the iPhone through.
Cars aren't a new product line, they're Tesla's only product line. If they fail, Tesla fails. History is littered with good ideas that didn't get off the ground the first time and then got bought for pennies on the dollar by an established player in the industry.
Everyone keeps talking about the cars... when it's really about the car factory:
> Ford has 23 global assembly plants that built 6,651,000 cars and trucks in 2016. [...] Elon Musk can imagine a single Tesla factory producing 5.25 million cars per year per assembly line [...].
> If this becomes the way to go for global car makers then Ford has 22 assembly plants it needs to scrap. I wrote scrap rather than sell because if every one of Ford’s competitors is doing the same thing there won’t be any buyers for those old factories.
Consider for a moment the logistics of moving 14,383 cars per day out of a single factory, nevermind all the parts needed to build them. (assuming a 15 foot long car, its (ballpark number) 43 miles of cars parked end to end.. per day).
The logistics and storage of both material and finished goods are part of why Ford has 22 factories to produce 6.5 million cars.
around 560 cars per hour - consider that a normal auto plant runs at 60-100 cars per hour - so what was proposed by the linked post was a 600-1000% increase in production - its largely a impossibility - because imagine for a moment of parking 10 cars per minute (or so) of operation.
So you hire more people to do the parking...? What's impossible there?
That's if we assume they don't just self-park.
The hard parts by far are actual production and getting in enough materials. If you can get in a thousand each of every single part, it's easy in comparison to get a thousand assembled cars back out.
Thinking just a little further, once the autonomy of the vehicle is good enough, there's no need to park the vehicle at all - you just tell it to start driving to a dealership or an owner's home.
There'd be some additional logistics to figure out how to recharge the vehicle as necessary on route, but that's a very different problem, and probably also amenable to automation.
its the space to store the cars, as well as the logistics of shipping them out - 14,000 cars comes out (optimistically) about 650 autoracks (railcars) per day - each one of those autoracks is 145 feet long. The scale of what is being discussed is near impossible, as it would mean an plant several orders of magnitude larger then any other ever constructed.. and I'm just focusing on the output - the logistics for the inputs for manufacturing are just as daunting.
The biggest disruption is the quality of the electric drivetrain. We are quickly finding that a "mediocre" electric drivetrain feels better to the average driver than a very good gasoline drivetrain.
That isn't what people intuitively expect, but once that expectation changes, the market is going to see major disruption. Gasoline based powertrains will not be seen as the superior choice by most people 5 years from now.
I'd fully expect that challenge to come from one of the established manufacturers.
We're still early-days yet on electric car technology - there are still many hurdles to overcome yet to make the technology practical for most drivers - so its really hard to say what the future will hold yet - I'm excited for the potential, but I'd like to think I see the realities of it.
I have no doubt that this is a factor is why Tesla is going somewhere - I don't know that this is enough to 'render all that came before obsolete'.
I'm hopeful yet though - I think a transition to electric power for cars would be wonderful - there are currently many drawbacks to electric power, mostly relating to batteries yet still to be overcome.
The other car companies are rapidly developing their own electric cars. See the Chevy Bolt and Nissan Leaf for mid-level and entry-level examples. Who says they will not disrupt themselves? These are huge incumbents with large R&D budgets who always look for ways to one up the competition. There is a very limited window of opportunity from an outsider where the insider industry misses something obvious, but that isn't frequent.
In most cases, what is called disruption is either breaking laws or ignoring some fundamental problem the incumbents think too important to ignore. They test assumptions, and (rarely) prove them invalid, but the intent to disrupt alone shouldn't make for such enormous PIs.
It's not just about getting an electric car on the market. They are going to have to release models with 5 star safety ratings in all categories/sub-categories, and enable their cars to perform like drag race cars, and enable their cars to drive themselves, and probably buy batteries from Tesla. They cannot move as fast as Tesla has been moving. They will survive. But there will be another US 'auto maker' to compete with.
The Bolt has a 5 star safety rating and was 2017 car of the year.
It doesn't seem to be selling that great, which could be due to a great deal of factors, but the awards it has won makes me believe that the traditional car companies are going to be able to keep up with Tesla at least on technical merit.
the Bolt doesn't sell well because they're only making 30,000 of them this year and the only place where they sat on lots was in California where they are competing against a dozen California-only compliance cars that you can't get in any other state.
Here in Ontario they sold out completely in the first month they were here and there's a waiting list that won't get fulfilled until next year at the earliest.
So let's say this is all true (and I have no reason to doubt it): is this an argument that Chevy is somehow outperforming Tesla? GM has a storied history of shooting themselves in the foot by doing dumb things like cramming lots full of cars where they aren't in demand. The Bolt may be great, but I believe Tesla will be more likely to avoid these kinds of pitfalls.
I never said anything about outperforming Tesla. I say it is a decent car and is selling reasonably well considering. And personally I'd buy it over a Model 3 because I don't like what I've seen of the M3 interior with its obsession with tablet interfaces, among other things. Also the M3 is going to end up coming in more expensive than the Bolt.
No argument here about GM shooting themselves in the foot. I'm a Volt owner and see it all the time. But it's a classic example of different divisions of a company fighting amongst themselves.
The fact that you'll never buy gas again is one.
The better drive is another -- quieter, better acceleration, smoother. There's actually no comparison on the numbers until you go way up in the Civic line to one of their sports car types.
Also better onboard tech -- last I looked Honda wasn't even offering Android auto. The system in the Bolt is in my opinion quite good.
The Bolt's body styling makes it look like a cheap hatch, which is unfortunate. The insides of the thing are actually really good. I'd recommend taking one for a drive just for fun. GM can't seem to get its act together on styling, but apart from fairly uncomfortable seats, I actually prefer the Bolt's interior to my Volt.
Anyways, here's some numbers. The Civic even in its "Sport hatch" configuration isn't even close:
Acceleration times & torque:
2017 Honda Civic Sport 1.5T Hatchback C
0-60 mph 7.0 | Quarter mile 15.2
Power: 180 hp @ 6000 rpm
Torque: 162 lb-ft @ 1700 rpm
2017 Chevrolet Bolt
0-60 mph 6.4 | Quarter mile 15.0
Power: 200 HP @ all RPMs
Torque: 266 lb/ft @ all RPMS
Every electric car has tremendous markup because batteries are still very expensive for the volume they put in the car.
It is also worth considering these batteries have a fixed lifetime. Any electric car is going to need new batteries in 10 years - batteries that originally represented about half the ticket price of the car. You basically assume the cost of batteries will drop tremendously in the next decade or else not only are you paying a lot for the car up front, you are also paying the price of a new entry level car every decade just to replace the batteries.
GM has put an incredible amount of engineering into the degradation issue and there are 2011 Volts still on the road with a few hundred thousand miles on them that have had no degradation issue.
Proper temperature control and discharge and recharge management is part of it. Air cooling like Nissan and a few others have done just doesn't cut it in most climates, which is why they've had to replace many customer's batteries.
You want a 5-star crash rating and GM ask which platform do you want it based on. Designing a good EV is a lot easier for companies that already design competitive cars.
You're right, they may survive. Surviving isn't gonna please the people who invested in them.
> The other car companies are rapidly developing their own electric cars. See the Chevy Bolt and Nissan Leaf for mid-level and entry-level examples. Who says they will not disrupt themselves? ... There is a very limited window of opportunity from an outsider where the insider industry misses something obvious, but that isn't frequent.
So the outsider's survival is uncertain. Maybe the right move, then, is to figure out which one of the incumbents will remain standing after all of the foreseeable disruption? Which ones are the least encumbered by their legacy systems and relationships? Which ones are sincere about pursuing the electric/autonomous future?
huge incumbents with large R&D budgets who always look for ways to one up the competition
One up the competition? These car companies introduce new plastics or fender flares and call it "All-new". That's how they compete, body styling and incremental change. Every single incumbent car company is incredibly slow moving and reluctant to create change, because each one of the low-motivation engineers in the chain of command is reluctant to work. "One up the competition", seriously...
1. It is a fundamental human trait to not expend energy when it is not required, and that includes engineering effort.
2. Engineering effort is not required for Ford to continue to be able to pay their engineers a living wage, as they could live off of their current product line for the next decade.
Combine 1 and 2 and surprise, you have lazy engineers.
It's still a car. An electric car, to be sure, and there have been quite a few of those for quite a long time. Electric drive systems are extraordinarily common.
It's not like Tesla came out with a radically new design for what car means and dropped an Alcubierre drive in the thing.
I don't think many of the major car companies are going to be disrupted too badly. They have massive scale compared to Tesla. Electric car technology is already mostly commoditized, and once these companies scale up production, they will manufacture huge numbers of electric cars.
Self-driving technology is going to become commoditized also -- it may be Google/Waymo/Apple who invent the technology, but the large established car companies are going to be the ones cranking out millions of self-driving cars.
The car companies that are going to be in trouble are the smaller ones who are still committed to old-school gasoline cars, such as Mazda and Subaru. They don't have the engineering resources to keep up with the others. Most of the other major companies know what is coming and are preparing to deal with it.
With the niche guys like Mazda I figure they could be able to work closely with bigger companies. Already it seems that car companies do this a fair bit. The new Fiat and Miata have basically the same innards for example.
I could imagine that in the future the big car companies aren't going to be that interested in making a small electric sportscar, but they could partner with Mazda to make a Miata electric.
True. The weight from the loss of the engine would not be equaled by the motors replacement ... but in general you are correct — the net weight would go up quite a bit.
> Those who keep repeating that Tesla stock is "overvalued" should understand that a stock's "value" is based on the current value of all future cash flows.
I'm pretty sure all the people saying it's overvalued understand precisely that.
Or that GS wants to move the stock in a certain direction. Perhaps they have a big short position and want to cover. They don't have to be right in the long term, just right enough to move the stock down 7% and make money.
Research and trading have strong information barriers, to avoid just the sort of thing you're suggesting. Banks enforce this very seriously. Search for "Global Analyst Research Settlement" if you want the history.
Well yes, but one doesn't necessarily expect the same individual to stay on the bottom. Reason dictates that an analyst would either improve or exit the pool instead of continually failing (why would a firm hire a persistently wrong analyst?) So someone has to be at the bottom, true, but I think it's odd for someone to stay at the bottom.
That would be highly illegal stock manipulation and people would go to jail if they were caught doing that. Also Goldman Sachs, would lose their credibility and with it much of their business.
Just an aside, but why am I never hearing about RBC capital? 10 of the top 25 analysts (on TipRanks) come from there, with the second place (Oppenheimer) only coming in with 3. That's a mammoth gap!
The TipRanks performance timeline is only 1 year. There are some short-term arbitrage-like opportunities available at this scale, but most opportunities are longer term - when the market has mispriced fundamental long-term value. I wouldn't be surprised if next year RBC capital has no analyst in the top 25.
It'll be pretty incredible if Tesla gets close to $50B in rev in 2020. I'm a huge homer for Tesla and I'm thinking they'll be like $50B in 2020. Many people still won't be convinced of Tesla's place. But that's how things go.
It is not manipulation. The stock is tremendously overvalued and has been basically forever, but that doesn't mean it will go down. Unfortunately "fundamental value" doesn't mean shit in a popularity contest where you have a lot of retail money investing in whatever they happen to like.
Although equities historically are the asset class providing the best return over the long-run, this is why I prefer bonds. With a bond, if your analysis is right, you get paid at maturity. With a stock, you can be right, and it doesn't matter. Stock is only worth what somebody will pay for it, and that can largely be determined by sentiment.
> It is not manipulation. The stock is tremendously overvalued.
This. I was going to say even $180 is still ridiculously overpriced.
Teslas statements are not good by any means when compared to GM and are even poor when compared to a company in problem times like Ford. Tesla even has massively less capital expenditures than both GM and ford. For instance, Fords after tax income was 4 billion, they had capex of 1.7 billion, and an EPS of +0.2. Compare this to Tesla at -0.6 billion revenue, 0.7 billion capex, -4.8 EPS (and they are issuing new shares each quarter for financing). Yet Ford cost $11 a share while paying out a 5% dividend - and this is all from a company in rough patch.
I have no idea why anyone is putting so much money into Tesla. You have to give Musk credit for great marketing and creating a cult around his image and ideas.
Listing current financial metrics compared to incumbent automakers kind of misses the point on Tesla. Not that it isn't "overvalued" (might be the most ambiguous word in investing) but Tesla's annualized GM is ~8% better than Fords, they own the refueling network (as opposed to incumbents which outsource it to gas stations), and are poised to control much of the future battery supply. Your Musk marketing comment is spot on in my opinion but at the end of they day these are not analogous companies financially, Tesla's charted a much-bifurcated path to growth and profitability relative to current auto companies.
> [Tesla] are poised to control much of the future battery supply
"Chinese companies have plans for additional factories with the capacity to pump out more than 120 gigawatt-hours a year by 2021, according to a report published this week by Bloomberg Intelligence... By comparison, when completed in 2018, Tesla Inc.’s Gigafactory will crank out up to 35 gigawatt-hours of battery cells annually.
...
Roughly 55 percent of global lithium-ion battery production is already based in China, compared with 10 percent in the U.S. By 2021, China’s share is forecast to grow to 65 percent, according to Bloomberg New Energy Finance."
It's worth noting though that the estimates for the Gigafactory have been massively revised (although no one seems to pay any attention to it) and will now be producing 100+ GWh of batteries yearly and Musk had stated that they're announcing 2-4 more this year.
Further, the Chinese government can say "fuck you" (as they have done with other companies) and make it prohibitively expensive to obtain the raw materials used for battery production.
You need other minerals, which are collectively termed "rare earth minerals":
Rare earth element map: In 2013, China produced about 90% of the world's supply of rare earth element ores. The USGS Mineral Commodity Summary [2] reported production tonnages for Australia, the United States, India, Brazil, Russia, Vietnam, and Malaysia. Rare earth element exploration and/or development is being done in Canada, South Africa, Thailand, Malawi, and Sri Lanka; however, production from those countries was insignificant during 2013.
Further China has already show willingness to ban export of these materials (for example in 2010). At the end of the day the risk to the production of batteries in particular has motivated vulnerable countries like Japan to develop alternative processes:
i am invested in Tesla because i feel like they have the best chance of seizing the bulk of the autonomous car market, out of the publicly traded companies available to me.
I could be totally wrong, but being first will allow them to grab the lions share of the business opportunities, and let them vertically integrate aka Tesla run uber, Fedex etc.. Being second is like being second with PageRank.
Definitely, I feel like it's partially just a question of what a full-stack 21st/22nd century auto company is going to be worth once the dust settles after the autonomous car wars. If it still means producing close to 10 million cars a year while also being a leader in autonomous driving software then we could be talking about a multi-hundred billion dollar company in the making. If, however, the number of cars needed to be manufactured drops precipitously and a number of strong competitors emerge in autonomous transport they may end up relying on their semi-truck and energy network investments a bit more. Only time will tell
Probably because the perception of Tesla is that it's more than just a car company. Retail investors don't see much of a future in the American car industry so they're betting hard on tech-first innovation.
I wouldn't buy Tesla for more than $200 but I really don't think it's hard to see why people do.
I liken this stock to the first few quarters of GoPro leading into Christmas. Investors are making it pop up and down, but the moment the possibility of massive growth and revenue meets up to reality, it'll slide down to a reasonable price.
"People don't buy what you do, they buy why you do it."
People don't buy Tesla because of what it does (make a profit selling cars) they buy it because they're making cars "to make the world a better place," by releiving reliance on fossil fuels.
The why is more influential than the what. It's the same reason people are dumb enough to pay a 40% premium for Apple products that are equal in any meaningful metric to a PC.
Which makes it a high risk speculative stock. You're essentially gambling on the future knowing the present company is extremely overvalued. I wouldn't even call it "investing" if you were to purchase their stock right now.
"Overvalued" is a funny term -- how can you overvalue a company who's competing on innovation? Remember people said the same thing about Facebook when they were worth $50b and Google when their only products were search and gmail. I agree that it's a risky buy, I disagree with the notion that there's something fundamentally wrong with high-value speculation.
Agree, there's nothing wrong with high value speculation as long as you recognize it.
Tesla is overvalued. If you were to take a present snapshot in time (a data point) and compare the assets and cash value of Tesla with what its stock price is it would be wildly off.
Everyone always remembers the winners, the Googles, Microsofts, and Facebooks. No one remembers the hundreds of dot bomb companies (including Cisco) that saw tremendous loss in stock when everyone thought they were "certain" to succeed.
Investors buy on future prospects of a company. While Ford or GM seem like a good value to you and me, where is the future upside to these two companies? They are in about every country, they have vehicles in about every configuration. Tesla has a lot more upside for future growth.
Then again, this is why companies like Ford and GM pay dividends on their stocks ... stockholders don't expect them to grow, just keep making money.
Why do people compare Telsa to companies like Ford and GM? Genuinely curious because I see it a lot. Both those companies sold over 1.2 million cars last year. Tesla around 16K. Numbers are US only.[1]
>> It is not manipulation. The stock is tremendously overvalued.
> This. I was going to say even $180 is still ridiculously overpriced.
My thoughts:
- Goldman Sachs (GS) makes buy helping other people buy and sell Tesla-related securities, profiting whether Tesla shares go up or down, and I simply don't trust the recommendation enough to make bets on the recommendation's value
- No one knows if the stock is overvalued because no one has perfect information about how Tesla will actually perform, including both Tesla & GS
- If I actually did know where Tesla shares would go, I wouldn't tell anyone, unless revealing the price would be a bigger windfall for me than keeping the information confidential
But if "how Tesla will actually perform" in the future is already priced in today, the stock can't continue to go up unless it continues to be overpriced.
What is it with this "already priced in" bullshit? It should be obvious by now that stock prices are not based on pure, rational calculations of value. This is why one single news article, like this one, can drop the value of the stock by 7%. The only way to know how Tesla will perform is to watch things unfold. A few years back, when Tesla was struggling to make the Model S happen, would you say that its current success was "already priced in"?
I would say that most of the big investors who are betting against Tesla are finance people, with a relatively poor understanding of the real potential for this company. They tend to see it purely as a car company. They don't understand that Tesla's battery production, their solar and utility-scale energy storage businesses are also worth quite a bit. They don't understand that the self-driving technology has a lot of value as well. They also don't understand that Tesla's electric cars are currently outperforming every other electric car, and every production ICE car as well. And lastly, they don't understand that Tesla is basically the Apple of cars, they sell cool, hot ticket items. Finance people who think "Tesla just can't unseat GM and Ford" are have definitely not "priced in" all the information.
The people who are betting for Tesla are either people more familiar with technology, or people who are just really rooting for change, and happy to see a newcomer finally shake things up. The latter have not "priced in" much information either, they are going based on hope. I personally think that Tesla has a very good shot at succeeding. Not only because Elon Musk does seem to eventually deliver what he promises, but also because the company has so many people rooting for it. These days, when Tesla needs financing, they just issue more shares, and people buy them up. This basically means that Tesla can pull itself out of debt very easily. I don't think that Ford and GM can say the same, they do not have millions of small investors rooting for them, ready to pull them out of debt. If Tesla slips up in its Model 3 deliveries, even by quite a bit, I do think the stock price will suffer, temporarily, but I think that most people will forgive them. Many people, myself included, are just very happy to see electric cars finally becoming a reality. I know that if Tesla ever drops near $200 again, I will be buying a whole lot more of it.
> What is it with this "already priced in" bullshit? It should be obvious by now that stock prices are not based on pure, rational calculations of value. This is why one single news article, like this one, can drop the value of the stock by 7%.
Perhaps some market participants value the price targets of Goldman Sachs, and this new information triggered a price readjustment to the extent that these participants traded the stock today?
As a pro Tesla techie+investor, I'm willing to pay up to $N per share for Tesla. The more below $N it is, the more I feel I'm getting a better deal. That doesn't have much to do with how much I believe, or don't believe in Tesla as a company.
I'm willing to pay up to a certain amount for a Model 3, just like I'm willing to pay up to a certain amount for a share of Tesla. No matter how much I like a Model 3, I'm not going to buy the last car on the lot for 2x the price because it's the last one. I'll just wait until there's another one at the regular price.
>> How do you calculate what you believe is a fair price for Tesla shares?
That is the question for which everyone wants to an answer that only they know :) You can build really sophisticated models to predict stock prices, but all models are really just making guesses about what a fair stock price is.
Some common questions to ask are:
- Does it have a positive the ACID test ratio? [1] Looking at the balance sheet [2], do the current assets exceed the current liabilities? If everyone thinks Tesla can pay it's bills, but you think they will have trouble doing so, you may believe a fair price is lower than what everyone else thinks.
- Does the company have a sensible price-to-earnings ratio? [3] Looking at the stock info [4], how much weight should you put on the P/E when determining what a fair price is?
- How fast is the company growing? Looking at the income statement [5], do you believe Tesla will grow faster or slower than it has been? And is your estimate higher or lower than what other people are guessing?
- How much will Tesla have to pay for Lithium in the future? [6] Do you predict that Lithium will cost more or less than the other people are guessing, and how much should your estimate factor into determining a fair value for Tesla stock.
Talking about share prices is pointless without referring to number of shares. Tesla wouldn't be worth 16 times more than Ford just because their share price was 16 times higher. Tesla's market cap being $11B higher than Ford is surprising but then Tesla has momentum that investors are factoring in to the potential future value of the company. Ford has cash-flow but is stagnant; Tesla announced in May that they doubled their Revenue from 1st quarter 2016. The challenge for traditional car companies is that their new competitor is acting and being treated by investors as a speculative stock.
Also, in your comparison of the financials you have called Tesla's after tax income for 2016 their revenue. And Fords capex for 2016 was just under 7B. From where did you source those figures?
It's a stock that's sanely valued and offers a dividend. I believe the author of the comment is pointing out a lot people think emotionally with their money.
I think the smart money should be looking at which established car-maker will be best able to make the transition to a future with electric personal vehicles and autonomous cars. It's clear there's going to be some kind of disruption in the next several years, and new players and the survivors are going to be splitting up the bounty.
People are buying Tesla stock based on the idea of what the company can become, not what it is right now.
Judging Tesla based on current numbers is simply being short-sighted. They have yet to produce a mass-manufactured car, sure, but unless you've been living in a cave, you know that the release of the Model 3, a car with over 400,000 reservations, is coming soon, and that's going to create somewhere between $13-17 billion in revenue as people pony up the money for the car.
The same is more or less true of bonds though, no? Bond value is determined by perceived credit risk and people's feelings about the future direction of interest rates in general. Of course, eventually if you're correct you do indeed get paid by the borrower with a bond. However, the stock market will eventually fall in line with realized earnings. The only real difference is that the bond market's time horizon is fixed, whereas the stock market can stay irrational for a finite, but arbitrary amount of time.
> Unfortunately "fundamental value" doesn't mean shit in a popularity contest where you have a lot of retail money investing in whatever they happen to like.
The stock market is fundamentally not meant to be an algorithm mapping company statistics to valuation. Treating it as such is nonsensical.
Not sure why you're being downvoted, I don't think you are wrong. Possibly the misunderstanding comes from a slight technicality - markets exist because buyers and sellers like a convenient place to trade. When buyers and sellers convene they arrive at a market clearing price, which is by definition the value of a company at that time. But finding that value is not the purpose of a market, and the fact that there are many varying opinions as to what the value of a company at any given time should be is what makes a market in the first place.
Please tell me you don't think GS is above manipulating the market [0]. Why can't it be both?
I completely agree that TSLA is overvalued. But that doesn't mean GS is issuing a report and lowering a price target in order to help out small, retail investors like us.
The overpricing is like a mattress topper. It's considered stable enough for short term investment at least. Especially the kind of investment that relies in volatility and mob psychology.
It's entirely to gain value from a bubble as long as the bubbles life span is longer than your goals. However you must exit the bubble before it pops by transferring ownership to someone who doesn't believe it is a bubble.
The timing is important because you need the right mix of doubt and hope. When good news hits, it's actually a great time to offload the bubble gains as there is a spike in hope with more buyers believing in a longer bubble. This may account for why good news often is followed up with a drop.
This is irregardless of belief in the stock. Bubble gains may be locked in to buy at a more reasonavke price because belief in the fundamentals of the stock are still strong. However the duration of the bubble causes the stock price to lose all growth rate information.
As a tangent, this is why I don't believe wall street provides much value. Price discovery and liquidity is important yes, but most of the money made seems to revolve around psychological manipulation moated by lack of transparency.
> With a stock, you can be right, and it doesn't matter. Stock is only worth what somebody will pay for it
I don't see it that way. To me, a stock is worth the 'fundamental value', i.e. the future divided payments discounted by an appropriate interest rate. If no-one is willing to buy my shares I'm still happy because I get the future dividends.
That's all find and well, and using the "dividend discount model" is one of the many methods of valuation, but not every stock pays a dividend. Those that do can cut them at their leisure.
Because you buy at a given yield, dictated by the coupon and the purchase price / maturity. Duration (sensitivity to interest rates) affects the price PRIOR to maturity, not at maturity. If you buy a bond at a 5% yield to maturity, and there is no default, you get earn that 5% period. You don't have to rely on somebody else believing that instrument is "worth" a certain price, the company pays it or they are in default and can potentially be forced into bankruptcy. Yes, default risk is a real risk (more in the high yield space than IG), but that is a much lower risk than volatility you can see in equities.
Just to be clear, I'm not saying stocks are bad, they typically always earn more in the long run, but they are volatile, much more than bonds.
> Unfortunately "fundamental value" doesn't mean shit in a popularity contest where you have a lot of retail money investing in whatever they happen to like.
We can all disagree on what the proper valuation of Tesla really should be, and there are good arguments on both sides, but this comment exhibits a fundamental and simplistic misunderstanding of how stocks such as Tesla are valued, and it's something HN as a group needs to do a much better job at understanding. To say that its valuation is purely based on a "popularity contest" is simple enough that it feels right, but is dead wrong.
The value of any asset is the present value of its future cash flows. In other words, find all of the cash that a company (or any other thing) will ever generate, sum it all up, and then translate that cash back into a value today using an interest rate you choose (since cash today is worth more than cash tomorrow). With that behind us, it's fair to say, "Ok — but how in the world can you ever know how much cash a company will generate next quarter, let alone next year or throughout its entire existence?" And that is the challenge of valuation, especially at this stage - Tesla's future cash flows will vary wildly based on whether or not it can execute.
That's why growth is so important in startups and other relatively young companies. If your company has revenues of x and will grow them at x^n, the n will matter so much over time that the x is nearly irrelevant. Because these sort of projections are often overly optimistic, HackerNews has become incredibly biased against this kind of valuation, and tends to focus on the times when it's way too high. But in doing so it ignores the times when they're way too low - something that's very easy to do. Everyone was saying Instagram was an obvious sign of a bubble when it was bought for $1B, but now it kicks off over $1b in revenue every year. We cried "bubble" along with DHH when Facebook was valued at $33B, and now it's comfortably at 10x that, spitting of $8B in revenue per quarter. The likelihood of that growth curve and those projections being wrong is usually priced in.
The question around Tesla isn't whether or not their market size will be big enough if they do what they say they're going to do (they're building the largest battery factory in the world, building an electrical recharging grid, have easily the largest data set anywhere for self-driving cars, etc.), but whether it's possible. That is Tesla's fundamental value, and fluctuations in its price are based on disagreements around what its fundamental value actually is.
So maybe that all comes to naught; maybe Tesla is wrong. That risk is priced in. Tesla's market cap is roughly the same as Ford's.
I'll just say that, for my money, if I had to choose whether I would own 100% of Tesla in 20 years or 100% of Ford, I would choose Tesla in a heartbeat.
That's wild. I'd have thought 401ks and institutional investors would be orders of magnitude more money than etrade and tdameritrade stock accounts. crazy.
TSLA is approximately 66% owned by institutional investors(investment banks, funds of any sort(including active and index funds that may be in 401(k)s). That leaves ~30% of the shares controlled by individuals, which is fairly typical.
That's sort of a weird way of looking at it. Don't Musk and Ahuja own like 10% of the shares? Is there an easy way to get non-insider, non-institutional numbers?
Ah, OP's assertion was the price is crazy from retail investors, which i assume would be non-institutional, non-insiders. It's impressive that a few % of owners can double the share price. Unless, they meant Musk was buying shares at $350+
I mean, I don't think that is what is happening right now, but you might be surprised what it takes to move a market sometimes. The Flash Crash[1] was caused by a single individual. Granted he was playing with futures and you can get some insane leverage with a modest account there, but it is within the ability of a couple of individuals with six-figure accounts to make some well placed bets and move a market significantly.
He definitely set off a chain of events that caused automated market makers to re-evaluate their idea of a fair market value rapidly in the downward direction, and it cascaded from there.
I just don't see Tesla becoming mainstream before traditional manufacturers fill the potential market opportunity. Volvo just announced they will only produce Hybrids in the future. [1] All the major manufacturers have hybrid programs they are bringing to the mass market.
It's not that Tesla will or won't be successful, it's just that as it succeeds, it's changing the ecosystem around it. Traditional manufacturers offerings are becoming more and more attractive.
I think Tesla is appealing to the tech/gadget market right now. For me, everything about Tesla cars and its buying process feels new and fresh. But..
When it comes time to buy my next car I'll probably end up going to traditional car dealerships, looking around, test driving, and picking something through a traditional channel. It's just the path of least resistance and there's a lot more variety.
> It's not that Tesla will or won't be successful, it's just that as it succeeds, it's changing the ecosystem around it.
I invested in Tesla because I wanted this to happen. For me, Tesla is not successful unless it changes the ecosystem around it. If, while doing that, it goes under as a car manufacturer, but in the end changed the ecosystem for the better, that's great! Sometimes a thing only exists in order to make itself redundant.
I doubt this will happen, though. Instead, I expect it to be like the iPhone vs Android: there will continue to be a premium electric car by the people who launched the first real contender, but other companies will outscale them and eventually provide really competitive products. That's also fine. (Note that Android was a newcomer as well....)
I forget which of The Innovator's Dilemma and The Innovator's Solution had the section on electric cars. But back in the 1990s it was projected that on current trends, electric cars would become viable around 2020. And explained why it was likely that traditional manufacturers would fumble the ball, all offer hybrids, and in the end most would go out of business because they couldn't make the transition.
It is worth reading those books and understanding the thesis. Because it is directly relevant to the current situation. We are looking at the gas -> electric conversion, in about the projected time frame, and all of the reasons for why traditional manufacturers were likely to fumble are all there. And the creation of hybrids that you point to is as relevant to the survival of traditional car manufacturers as the creation of sail/steam hybrids was to sailboat manufacturers roughly a century ago. (News flash, the big ones all made those hybrids, and none successfully made the transition to pure steam ships.)
This is not to say that Tesla will be a big player in the all electric age that is coming. But its odds are better than Ford, Toyota and GM.
1) Automobile efficiency has moved dramatically since the 70's and that's due to government regulation. That regulation continues to push the industry as a whole.
2) The regulation goes beyond automobiles, were moving to alternative fuels as a people. Auto's will be drug along with that shift.
3) Automobiles and selling cars, in general, are a lot more than JUST the drivetrain. All that was really talking about with electric is a drivetrain. It's not clear to me yet that everything about a car has to be rethought to simply make it electric.
>It's not clear to me yet that everything about a car has to be rethought to simply make it electric.
it isn't "has", it is an opportunity to rethink what hasn't changed in the last 100 years.
Google/Apple (and probably Uber) can attach drivetrain to their platform while Ford/GM just aren't capable of producing a platform to attach to their drivetrains. Tesla is an intermediate step in that direction and it looks like a good [though far from sure] candidate to make it successfully into the future of electric connected self-driving cars.
The problem that those books focus on is the difficulty in switching from an existing superior technology that meets the needs of an existing market to a new inferior technology that will some day meet the needs of an existing market, but does not yet. The problem is that the initial markets for the new technology are marginal ones that established companies do not easily get motivated to deliver to. And by the time that a mainstream audience is potentially interested, new companies have sprung up for these marginal markets that happily undercut the profit margins that established companies depend on. So everyone naturally migrates up market and this continues until established companies have such a small slice of market that they go bankrupt.
In the case of cars the key performance characteristics that we need are ability to accelerate into freeway traffic, braking ability, range, and recharge time. Electric is naturally worse than gas on all of these characteristics at the same price point, however battery technology is improving at a predictable rate and it will eventually meet the characteristics that people need for daily life. At which point pure electric becomes viable for all of us.
Therefore the prediction from 20 years ago was that the pure electric cars would likely to come from something that perhaps looks like a glorified golf cart, which will eat out the car market from the bottom up.
Tesla doesn't look like this because Elon pursued an unexpected angle. He found that he could produce acceptable high performance electric cars long before the initial projection, because the profit margins on gasoline cars in that category were high enough to absorb the insane cost of the batteries. As battery technology improves, he is able to move down the quality curve. But to do so, he has to keep thin profit margins.
Traditional manufacturers still face the traditional problem. They can't afford to offer an equivalent electric car at an equivalent price because their cost structures are too rich. But he's moving down the value chain and broadening, and not moving up. By the time he can offer a mass market car, he'll have an unbeatable edge.
Of course even if Tesla's plan doesn't work, don't count out large electric golf cart companies moving up market into automobiles like Marshell Electric Vehicle Co Ltd, EZ-GO, Xiamen Dalle Electric Car Co. LTD and Polaris. Just as was predicted 20 years ago.
Either way, I do not think it likely that most established automobile companies will survive the electric transition. If they do, it will be the first case that I know of where established brands are successful in switching to an inferior technology.
GM released the Bolt several months ago, which has a longer range than the Model 3, and you can drive one off of a dealer lot right now. I test drove one and it's an awesome, fast, and affordable electric car. An average person, without any kind of pre-order, will not be able to drive off a lot with a 3 for at least another 2 years. Tesla has completely missed the ball. GM will be on their 3rd revision of the mass-market electric car by then. That's not even counting Toyota who are several revisions into the Leaf and many more into the Prius which eats Tesla's entire product line for lunch.
The Bolt costs $37,500 and according to rumor GM is losing $8-9000 per car for that. So let's say that the real cost of manufacture is $46,000.
The Model 3 is a comparable car starting at $35,000 but is planned to sell at an average of $45,000 with an independently estimated profit percentage of around 25%. That means that the cost of production is somewhere around $34,000.
If costs continue looking like that, as both companies scale electric car production up, which manufacturer would you prefer to be?
Also I called them comparable, but they really aren't. After looking at safety in accidents, the driving assist and so on, my family doesn't consider them equivalent. We put a deposit on a Model 3 which we hope to buy next year. Traditional manufacturers are well behind Tesla on key amenities like that.
I'm inclined to agree with you, except that people do buy Teslas and there is a huge waiting list for the Model 3. So your model seems to lack some explanatory power.
Except, they didn't fumble on anything...GM released the Bolt several months ago
With an already outdated charging system! In terms of styling and execution, I'd accept a position that GM is more competent than Tesla -- especially for the conventional vehicle-as-appliance crowd. But in terms of knowing where to go in the future, I think GM has a considerable disadvantage.
You can drive one off the dealership right now because no one else wants to. GM doesn't have the capacity to make anywhere near as many electric vehicles as Tesla does right now.
You could potentially make your engine, or whatever is burning fuel, more efficient by itself, if it is no longer required to drive a transmission and can run at any speed. Add a battery, and that enables you to do more stuff, such as regenerative breaking.
Congrats, you got a hybrid now (not unlike a Chevy Volt).
A large engine is generally more efficient than a small one. Most cars are in the 20% range. Steam turbines do better than 40%. So even with transmission and storage losses, having a centralized engine outside of the vehicle is much more efficient.
There's good reason to believe that electric cars are the future and will soon be a massive market. I think there's also good reason to believe that Tesla has a big head start on the competition and has the opportunity to dominate this market if they execute well.
For example, just look at the battery packs which are essential to an electric car. Tesla was unable to find a supplier that could meet their requirements, so they designed and produced their own batteries and now have a $5 billion gigafactory to increase production volume and decrease costs (with more gigafactories on the way). If you're another car company trying to enter the EV market, what are your options? Buy inferior battery packs at a higher cost from a different supplier? Try to replicate Tesla's battery technology and then convince your board to build a gigafactory so you can produce them at the required volume and cost?
>> Buy inferior battery packs at a higher cost from a different supplier? Try to replicate Tesla's battery technology and then convince your board to build a gigafactory so you can produce them at the required volume and cost?
Why not another option - battery manufacturer notices that if they build an equiv. battery they can sell to every car manufacturer in the world. With the higher volume they'll be able to do it for less than Tesla if they are only building for their own cars.
How long will it take them to catch up with Tesla (while Tesla is simultaneously advancing their own battery tech)? And even if they can hit that milestone, they'd presumably have some amount of profit margin built into the prices. So to actually compete with Tesla on battery price (and why would they even want to) they'd need to advance beyond Tesla in terms of manufacturing efficiency and/or volume. I don't know of any company poised to fill this gap in the foreseeable future.
> When it comes time to buy my next car I'll probably end up going to traditional car dealerships, looking around, test driving, and picking something through a traditional channel. It's just the path of least resistance and there's a lot more variety.
I believe Tesla is gearing up for the car purchase after your next one. You're currently thinking in terms of a car that you'll be driving. For those cars, you're right, there are other car manufacturers that will be more successful.
However, once cars are fully automated, the entire game will change. Market leaders of today will be up-ended. That's when I believe Tesla, Google, and anyone else who has driverless technology will take over the industry.
That goes double for the taxi companies like Uber, Lyft, Juno, etc.
However, once cars are fully automated, the entire game will change.
This may be true, but nothing I have seen so far suggests that ubiquitous full automation will arrive until long after the likes of Tesla and Uber have run out of money. From here, it looks like we still have several rounds to go for each of
- Can we actually do it?
- Will the regulators let us do it?
- Will the public believe we can do it and trust us to do it safely?
That assumes there are no black swan events undermining the whole car industry in the meantime. Given the increasing population and congestion issues in many big cities, the corresponding increasing interest in planning/zoning policy so that using cars to get around is less essential, and the environmental implications of this kind of vehicle even if it's a hybrid or totally electrically powered locally, I think there's also a slight chance that demand for this kind of technology will never reach critical mass at all.
That's mostly because they are sensitive to brand damage in ways that Uber and Tesla (not Google) are not.
Mercedes or Volvo getting caught with a product in the ways Tesla has been getting caught would be unacceptable to their customers. The brand damage would be massive. Tesla as 'the new kid on the block' has a lot of leeway to mess up that you would never accept from an established brand. The whole autopilot saga is an excellent example.
By the time Volvo or Mercedes release a next level self driving car you can simply expect it to work, all the time. Until then they will release small incremental steps on their 'driver assist' technology.
I'm sorry but that's just flat out wrong. Just last year Mercedes advertised their blatently inferior (compared to Tesla's AP1 at the time) driving-assist features as literally "Self-driving" and saw NONE of the backlash that Tesla faced with the autopilot accident. And Tesla has never advertised their current or former Autopilot as being "Self-driving".
I think the opposite is happening - that Tesla is under much more scrutiny because they're the new one on the block. Because the established automakers have done some terrible shit, which would absolutely kill Tesla as a company.
I'll gladly find sources and further elaborate, if you're interested.
What their marketing department yells versus what they deliver has a huge gap, what I'm talking about is not the marketing part but the actual tech. I'm not aware of MB or Volvo getting into the kind of crashes that Tesla has been having.
This insidious definition of Uber as a taxi company must be highlighted. Their entire business model is based on them insisting they are not a taxi company and as such the taxi laws do not apply to them. Everyone knows this is horseshit and when there's no focus on it , just calls Uber a taxi company and ignores cheerily the devastating effect Uber has on the rule of law. What would remain of society if every company could pick which regulations they want to keep and which ones they don't?
They're not a taxi company. They do not take street hails and as such, their regulation needs are different. For example, there's no need (or at least less need) for the government to regulate fares since people trust the Uber app to give them a fair price (whereas if you're a tourist and you were to just hop into a random unregulated car you hailed, it would be difficult to tell if you were getting a fair price).
Honestly, ordering an Uber on a mobile app is the current-day equivalent of a street hail of a Yellow Cab (or other legitimately licensed, metered, and branded taxicab)
> However, once cars are fully automated, the entire game will change. Market leaders of today will be up-ended. That's when I believe Tesla, Google, and anyone else who has driverless technology will take over the industry.
> That goes double for the taxi companies like Uber, Lyft, Juno, etc.
The interesting thing is that you didn’t mention Mercedes Benz.
Mercedes Benz owns a few carsharing and Taxi apps in Europe, almost all Taxi operators lease cars from Mercedes Benz (which, in return, gets better deals with them), Mercedes Benz licensed the entire Tesla IP and has used it already in one model, and they’ve got their own electric cars and self-driving prototypes as well as self-driving trucks.
Mercedes Benz is the most likely candidate to build a vertically integrated Taxi solution. They’ve got deals with all major cities, with Taxi operators, they own the IP, they’ve got the apps and the infrastructure, and they’ve got the required prototypes.
And that in my opinion will be the ultimate nail in '3rd party apps' for mobility. In the end, the car manufacturers own the hardware and will easily take over the market once the elephants have started dancing.
GM is invested in Lyft and Mercedes Benz has their Car2go division. Seems to me that the traditional car companies have a reasonable head start into the autonomous "transporation as service" area as Tesla does, just from another direction first.
Will I even be buying the next car after this one? Most people own cars for 8 to 10 years. We could be looking at rental cars in the future by that point rather than outright ownership.
Already now Leasing contracts enable exactly this. Every odd years you will get a new car but you pay basically for the access to the vehicle not the car itself.
I agree. I think a lot of the 'terms of use' that come with Teslas will be problematic for them, and things like the cost of repair, the strict lack of market competition, and other issues will leave a lot of room for conventional auto manufacturers to step in.
The Model 3 will tell us a lot. If they can ramp up production fast enough, if they can fill orders quickly enough, if they can satisfy the 'ordinary' customer's service expectations, they may take their place in the long run as one of those 'traditional' auto manufacturers long-term.
There's a lot that can be missing or not at scale in the luxury car market that won't fly at the Model 3's price point.
Yeah I think it might be easier for the traditional car companies to slide into making electrics than people think.
I could easily imagine the traditional car companies making the exact same successful models as now, but with the electric engine being a checkbox option.
The 2017 Electric Volkswagen Golf is apparently quite good.
They make them--besides the Golf, there are pure electric versions of the Ford Focus, Audi A3, Kia Soul, BMW 3-series, Fiat 500, and Smart, and some of those have been around for years. People seem to prefer electrics (and hybrids for that matter) that are unique--or maybe, dedicated electric platforms make for better electric cars than do ICE cars with a drivetrain swap.
Even if large traditional car manufacturers switch to electric vehicles at scale, won't Tesla have quite a headstart at least when it comes to their battery production capabilities?
Perhaps, but the traditional car manufacturers already have a massive head-start in profits. :) If it comes down to it they can spend some money/time to ramp up their supply lines to competitive levels and come out fine.
It's also worth noting that the differences between Tesla and traditional car manufactures are much less than the differences between SpaceX and the traditional aerospace companies. There's no real business innovation on the Tesla side that the traditional manufacturers will have problems emulating aside from autopilot, whereas SpaceX introduces a whole new industry paradigm.
You think that money is the key to scaling up new manufacturing lines, when in fact new manufacturing lines scales up through really hard engineering, and no good, driven, or genius engineer is going to go work for Ford or GM regardless of pay. They want to work at Tesla where they can actually have autonomy and decision making power.
Interviews of SpaceX and Tesla engineers show how much they've grown out of the conservative engineering molds they found at large, bureaucratic companies like Ford and GM.
Edit: Basically Ford and GM are manager driven. They are about small, incremental change where you don't change too much too fast. And you are one cog in a line of 50 cogs. At Tesla it's cutthroat and bloody, so if you get recognition and clout early on, then you basically get to do whatever you want. At least that's my understanding and that's the understanding that good engineers have
So in your mind there are no good engineers who prioritize their families and don't want to work weekends? No good engineers with sick/infirm relatives who need care outside of work? No good engineers who are turned off by (according to you) the need to be "cut-throat and bloody" at what's supposed to be a constructive, team-based endeavor? No good engineers who can't or won't just uproot themselves and their families on a whim?
Right now I work 60 hours a week between my current job and side projects, and while I'd love to work for SpaceX or Tesla from a professional standpoint (my 3rd-grader self literally drew "designs" in pencil for warp drives after watching Star Trek with dad), the fiancée and I are probably going to have kids in the next 3-4 years, and she has her own career to think about. At that point I imagine I'll cut back on the side projects as well as take time off from work here and there to help her out. From what I've heard I doubt I could do that at Tesla/SpaceX without professional consequences. But I guess that just makes me a shitty engineer who is simply incapable of doing something as god-like as helping scale a production line. :P
The issue at the traditional manufactures is leadership, not talent. If the leadership reforms and adapts the talent will be there. That's a large if, but certainly not improbable if Tesla seriously threatens their core business.
To answer your first question, a strong yes. You are a worse engineer for not losing your family over it. That's a hard pill to swallow for everyone but it's also true; the engineer that lives in his work will be better than you and might be 2-5x more effective than you at any given company.
What the issue is at traditional companies doesn't matter, the fact is that they suck and they cultivate lazy engineering. I hope that 100,000 engineers kill themselves working for Tesla because humanity itself will not survive without their effort, and then the trillions of humans that have lived and died will have done so in vain, and all of that is much more important than your kid's star trek drawings and warm-fuzzies.
I felt compelled to downvote due to the tone of this answer. But I'll try to resist that temptation.
Objectively speaking, someone who does not have a family can work more hours, not necessarily produce better work. But they can, potentially, as long as the "extra" hours are also focused on work. Not sure how long that is sustainable.
I'd like to ask this: if we need to kill hundreds of thousands of people to try to save the human race, are we even left with something worth saving?
It is not clear to me that workers need to sacrifice themselves to death in order for us to survive. There is no evidence of any impending catastrophe that would require such sacrifice.
I don't think you know what day of the week it is friend.
A study by the Standford CS department shows that total productivity sharply declines after 50 hours of work in a week. Mistakes get made, inefficiencies are introduced. I only shoot for 60 because I can typically vary the work and disperse it over the weekends, which helps.
Also my fiancee supports me in my efforts and gives me an extra reason to go to work in the morning. She makes me more productive and provides much needed support and motivation (we largely depend on my salary at the moment). Now sure if I had no desire for a family or friends or life experiences and became some kind of solitary engineer-warrior-monk, and was able to do so without falling into severe depression, maybe I'd be marginally better, but the difference would not be nearly enough to warrant the sacrifice. Even Elon Musk spends some (albeit limited) time with his family and talks about how he's had to tone it down recently (from getting 4 hours a night to 6 hours), and recently tweeted about having a fun night mixing wine and ambien. I have no doubt he works harder than me, but even he has a family and down time.
Also, I work at a big traditional defense contractor. Large companies are hardly monolithic. Some programs suck and are staffed by lazy/ineffective engineers, but my program's customer is quite satisfied at the moment, as are other programs' customers. That's why we get business, we do have competition that will take it from us if we don't deliver. You can't paint 100,000+ employees with one brush, and trying to do so makes you sound unintelligent. Correspondingly your statement "What the issue is at traditional companies doesn't matter, the fact is that they suck and they cultivate lazy engineering." makes it clear that you're not interested in discussing the issue and more interested in validating your own beliefs, which you have no evidence for beyond having "read some interviews". Once again, that diminishes your credibility.
And I don't give a damn what you think about my 3rd grade drawings (fyi you clearly rushed through reading my post and missed the phrasing, I don't have a 3rd grade kid). It was meant to support the statement that I actually am passionate about space tech and would love to work on what SpaceX works on, nothing more.
And warm-fuzzies are clearly something you need more of in your life. Tesla will probably help save the world, but they're hardly the only force out there, or even the decisive force when it comes to combating climate change. Even if they fold I don't think you have too much to worry about.
I've been polite up to this point, but I'll be blunt: You sound like a 14 year old who's sole knowledge of the world comes from blog posts. Which is fine, but don't expect anyone to take you seriously. You have to earn that when you're in a room of strangers (which is what this forum largely is), and you've only done the opposite.
There might be a study that supports working shorter hours but the truth is that if keep a mental image in your brain for longer, it will be easier to recall that mental image later. This is how Calculus was invented, keeping the image of the problem in the brain at all times; that is how good work gets done, and that is when inefficiencies are reduced.
Fiancees are great, I agree. And I don't think there is anything wrong with families.
You admit yourself that your company has some bad programs. Those programs are hemorrhaging money that comes from the public. That's really awful and everyone involved should be fired for wasting taxpayer money.
I dunno about the rest of this, I'm just super passionate and I'm willing to come along and tell some mid-level engineer at a big company that he sucks and his company sucks, because it's probably true. I could come to your company and observe long coffee breaks, people who put in three hours a day, and all that stuff, and you'd brush it off when I brought it up. It's cynicism because that's what is actually out there. People suck. You try and rationalize it but your company is going nowhere fast as soon as the government contracts and fat military cheques run out.
I'm in my 20s and and been incredibly hard working and suffered a lot in my life, I'm just very passionate and I'm willing to tell you that your company is really not good, because it's not.
Sure. And yet Thomas Edison intentionally nodded off with a handful of ball bearings (to wake him up just as he nodded off) to help solve problems. Diffuse mode learning, aka putting things on the back-burner can be very useful for solving complex problems. As any number of articles posted here can attest, there's more than one way to skin that particular cat.
A lot of those programs probably are due to fold. At the end of the day that's up to the customer. As I said, we have competitors willing to snap up business on fairly short notice. Quite often the contracts are structured so that the customer can cancel them at will, no lock-in.
Saying everyone involved should be fired is a carpet-bomb solution that risks punishing good talent. Sometimes the program you work on ends, or you want a career change, and take what looks like a good opportunity but turns out to be shit. Sometimes a change in leadership turns a good program bad and there are no good transfer opportunities. There are no glassdoor.com reviews for internal company programs, if you're lucky you get hearsay, and I've known many good engineers that were stuck on bad programs for some time before being able to transfer off. Fire the offenders sure, but it's not black and white.
I wouldn't brush any of the criticism off, actually. I'm well aware of my company's institutional flaws, many of us gripe about them on a daily basis. But I think you'd be surprised how many of us bag lunch and work unpaid overtime when deadlines are near. I'm not defending my company, but I am defending most the engineers I've met there. A lot of us are actually hoping for some extra competition to shake up upper management. Hell we had no less than two dozen people, including a low-level manager watching the SpaceX live-stream when they landed the first Falcon 9, and we were as excited as anyone. We'd universally love to work on something like that, but we don't get to pitch contracts or control the money. I can't speak for the entire company, or even a substantial fraction of it, but that's my neck of the woods. The picture is not as black and white as you think. Don't let your passion or prior suffering blind your attention to detail.
Yeah, my company sucks when it comes to vision (and some other things). Here's hoping SpaceX eventually makes us better in that regard. Not that my program's in danger anytime soon, we're not in SpaceX's direct line of business. I'm in my late 20s BTW.
Honestly I think the biggest hurdle for breaking into the mainstream is still charging infrastructure and the all-electric nature of Teslas. Sure superchargers are a lot more common than they used to be but they're nowhere near the saturation of gas stations (the need for which will ramp-up if the model 3 sells) and good luck if you go out into a rural area.
For the time being EV/Gas hybrids like the Volt are a lot more practical and cheaper. I could walk off the lot with a lightly used Volt for half the price of a Model 3 and get the vast majority of the benefits (autopilot simply isn't a big selling point for me at the moment) with none of the downsides.
You cant compare the two. Ever car needs a gas station a few times a month. An ev owner could charge at home and literally never use a supercharger. You dont need a supercharger in every tiny rural town.
I'm thinking more about travelers passing through. Even if I owned a Tesla I literally couldn't take it to see my relatives in rural North Carolina, or go camping in many locations. Right now supercharger station coverage is about as effective as cell service was 10 years ago. It's there, but there are noticeable dead zones that lots of people (although perhaps not people in the HN bubble) will care about. Hopefully Tesla can continue making money and build out the infrastructure further, but right now for anyone on a strict budget, even a Model 3 is paying a large premium for an ultimately less capable vehicle. At their current rate of expansion, maybe in 5 years I'll start thinking about an upgrade. :)
Sure. So EV will not become 100% of cars tomorrow. But I think right now with the current charging infrastructure, EVs could be something like 90% of cars (or at least a very large amount). I could replace both of my cars tomorrow with EVs and be OK.
Would it mean I couldn't take it camping to the UP in Michigan? Likely, but I go every 3 years at most anyway. I would just rent a dinosaur bone boner from Hertz for the weekend if I really needed it.
Sure, there are many infrastructure products that are different from cities versus rural areas. Tractor maunfactures do awful business in cities, but John Deere is still sucessful.
For EV to replace cars you need to have superchargers along the main roads (already getting there) for long trips and also some place for visitors to charge in small towns (either superchargers or chargers at hotels, campgrounds, rest stops, etc.
There will still probably be areas of the country where it will be hard to find charging stations (although gas stations are infrequent in those parts currently, its much easier to bring some extra gas in a can then an extra battery).
There's one area that traditional car manufacturers can't compete in: software.
pg said it best when he said something like "Traditional manufacturers vs Tesla is like Microsoft in 1997 vs Apple in 2017"
It's debatable whether software is important enough to matter, but when the most valuable feature of most cars is that you can turn off their horrible software, that's an opportunity.
I wonder how many of the traditional manufacturers will have as secure a supply chain as Tesla for the battery capacity needed to build much more than a hybrid dominated lineup.
VW and GM are investing heavily in building infrastructure for the electric cars they'd come up with in near future.. That means battery manufacturing facilities, testing infra and tweaking/creating new factories.
I've been invested in TSLA since 2012. And there's always been people saying it's "over-valued", especially the media or folks who don't believe in Tesla's mission or potential. The best thing I've found is to work the numbers a few years out and see what you come up with. Sure, each person's forecasts will be different, but I base my numbers off of company forecasts and also Tesla's track record.
2020 deliveries: 1M vehicles (according to company guidance)
Average sale price per vehicle: 900k Model 3 and Model Y x ASP $42k = $37.8B. Plus 110k Model S/X x ASP $90k = $10B. Total revenue $47.8B
Gross margin = 25% (company guidance is 30%+ for Model S/X and "mid-20s" for Model 3/Y).
Gross profit = $12B
Operating expenses = $6B (note: It's difficult to predict operating expenses 3 years out, but Tesla will likely experience a lot of operating leverage as their sales will grow much faster than R&D and sales.)
EBITDA: $6B
P/E multiple: 30 (note: If targets are achieved in 2020, Tesla likely to be growing 50% year in revenue and would likely fetch a 30-40 P/E multiple.)
1. The above are my forecasts based on my beliefs that Tesla can reach their own forecasts of # vehicles delivered in 2020 and gross margins.
2. Each person has their own beliefs/ideas of Tesla. So, I'm not trying to convince anyone.
3. This model can be tweaked based on changes in # vehicles delivered, gross margin, or operating expenses... to name a few factors. So, it's not perfect but it gives the basics.
4. If you find someone bearish on TSLA and who thinks it's "overvalued", ask them to give you numbers like I have. Chances are they won't be able to.
5. The Model 3 will be the iPhone moment for autos. A sexy car that redefines transport and brings in high margins. This is why Tesla has potential to be the most valuable company in the world by 2025.
6. Tesla's moat grows as they execute faster than any other auto company. It's not appropriate to value TSLA based on other auto makers. It's like valuing AAPL in 2007 based off of Nokia and Blackberry.
Current model assumes one car per person. That's because only one person can drive a car.
How many self driving Teslas could be needed to meet transportation demand for just the US. A lot more than a million.
If Tesla can actually deliver a mass produced self driving car while everyone is still figuring out how to make electric cars with good mileage then they become the next Toyota. Just like Apple became the next Nokia.
Looks like you might be using EBITDA wrong up there ('operating profit'). just fyi. This approach is essential but most casual investors seem to overlook it. I find it also useful to contemplate worst case and best case scenarios and orthogonal scenarios and kind of work it all together in the intuition blender. For instance, by the time your 2020 rolls around I think it will be 100% obvious that ICEs are the walking dead (who is gonna buy a new one hoping to sell it ever when 5 years down the road there's far fewer buyers?), and that autonomous ride sharing is gonna become huge, and that Tesla may not produce a lot of profit in manufacture but in software\revenue sharing, and that they may never hit high manufacture numbers at all (or may literally detach that part).
I guess Goldman knows better how to value a young car company that moves 5 times faster than the rest of the industry, makes mind blowing products that people want to buy without even seeing them, has an unprecedented cult following with many betting their entire 401k on the company, and has survived many near death moments and came out strong... I wonder what gives such armchair analysts conviction to comment on companies like Tesla, Amazon and Netflix who are driven by irrationality and ambition.
Excellent point. What's interesting about it is that a stock price contains all sorts of assumptions and information and blends it all together into one number, which is simply the last price that a share traded at based on supply and demand.
Surely Goldman has baked a lot of assumptions about market expectations into this assessment, and surely Goldman is wrong about many of those assumptions and right about others. A more nuanced analysis would be a probability distribution of possible price bands at various future dates.
Surely by Goldman's logic it is irrational to buy (or perhaps even to hold) Tesla stock at above $185. But Goldman's analysis would also likely have discouraged investment in many other successful firms over the years.
One doesn't listen to Goldman because the advice is true, one listens to it simply to reduce the probability of major deviations from the mean across a portfolio.
Something not really mentioned here is that many of Telsa's investors aren't in it necessarily because of what the financial statements show. They're pouring money into a company they fundamentally believe in -- into a movement which they feel obligated to contribute to.
The stock price is probably overvalued by the books, but for humans desperate to embrace a company who's making an attempt to make a better, cleaner world, there likely isn't a value too high. Ecological returns > monetary returns?
Quoth A. Gary Shilling: The market can remain irrational longer than you can remain solvent.
TSLA is simply not responding to the market like most stocks in its sector do. That can screw with any model based on previous data, which is really the best we can do.
"The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." [1]
Taibbi has published "Griftopia", a book which I heartily recommend. Perhaps the least partisan of his works, because everyone in it gets it: republicans and democrats alike. Even Obama, believe it or not. He has a knack for explaining complex things in simple ways without cutting that many corners to make them understandable by mere mortals. If you are to this day not entirely sure why the financial crisis happened, you need to read this book. Dude really reminds me of the late Hunter S Thompson.
This article goes on to suggest that Goldman Sachs orchestrated global warming so it could profit on cap and trade. Seems a bit like Epileptic Trees[0] to me.
No, this is not the approach at any of the large banks.
It's not the fine that kills you. It's when your customers lose your trust and no one trades with you any more. Goldman has a ton of competitors in all their businesses that would pounce on any angle they could use to lure away customers. Committing fraud, etc, is a quick way to lose all your customers.
Plus the SEC and other regulators have a lot of political pressure to nail the big banks for any misbehavior.
Big banks are paranoid about these things and have huge compliance departments to minimize the chance of anything going wrong with a regulator.
If you signal a thing that you don't believe, as is assumed that GS was doing in the hypothetical you are responding to, then you have behaved deceptively. You are free to argue that GS does believe that Tesla is overvalued, but it is not relevant to an argument which explicitly assumes the opposite.
Classic unfolding of buy on rumor and sell on news. Before solid news came out, the hype drove the stock high. Now that the Model 3 news has been steadily coming out, it's time to sell. GS is just following the basic sentiment swing.
And even if you believe that the stock price should be $500, it pays to sell on something that is widely perceived by others as a sell signal and then buy back in when the stock price is lower. Very little long term information is provided by this short term drop.
For everyone in this "it's overvalued camp" - I've owned TSLA since a little after the initial IPO when Jim Cramer advised everyone to sell (https://www.youtube.com/watch?v=6nYPhi0LwO0). I have heard analysts and everyone under the run yelling sell over this last 7 year run. It was overvalued at 50. It was overvalued at 100. Oh, so fair value according to GS is now 180?
It's really incredible to me when everyone gets on HN and puts on their equities analyst hats. You guys get it wrong time and time again - and the same applies for REAL equity analysts who actually post analysis that people pay for. Let's not forget AMZN was a junk stock going to 0 in the nineties. In recently memory, CRM, NFLX and FB were all considered stocks that could go to 0 and no one had any business owning.
I'm not even going to offer any analysis of why I'm continuing to hold my TSLA stock in this post - I'll just say that my bull thesis on the company remains true. If anything, Elon has finally kept a promise with Model 3 production. If you want the company's long history of missing promises, go watch Revenge of the Electric Car (https://en.wikipedia.org/wiki/Revenge_of_the_Electric_Car_). Once again, the company blew past every imaginable deadline, was left for dead, and is now the highest-valued automaker in the country.
The solaxun comment that was #1 when I posted this is fundamentally correct - if you want to talk valuation, go trade bonds and please leave your BS end of the world market analysis to Zerohedge.
Also remember that AMZN went on to lose 90% of its value in the early 2000s.
At what point would you consider TSLA to be overvalued? Do you have an idea of where your personal alarms start buzzing? Anyone can say the naysayers are wrong on the climb but the problem with bulls is their optimism and it would be interesting to see your working that justifies a particular price for TSLA.
I love Tesla, but I'm reminded of this quote from Scott McNealy during the first tech bubble:
"[T]wo years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking!"
> At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends
Or you spend 10 years growing revenues by 10x and then, at the end of your 10th, 11th, 12th, 13th, 14th and 15th years, pay a dividend equal to 5% of revenues and earn your investors a 9.3% IRR. Or grow revenues 20x and yield them almost 25% of IRR. (Both analyses assume you close down shop at the end of Year 15 and so represent lower bounds.)
High-multiple plays rely on growth. Whether that growth assumption is rational depends on the context.
I don't see this being mentioned anywhere, but the biggest reason I'd be wary of _any_ consumer vehicle manufacturer's high stock price is that the demand for cars will decline in the following decades as self-driving vehicles dramatically reduce the demand for ownership.
"who are the most advanced". Any sources for this? As far as I'm aware none of their cars are on the road in the hands of customer.
Also a lot of this companies are betting on Lidar becoming magically cheaper. Buying a company doesn't necessarily mean they'll kill it. Big companies have a lot of politics and red tape before integrations can even happen. I was at MS when they bought Skype and later Nokia. Middle management blew the whole thing up.
Most likely the technology that will be used will be that of which Google is developing. Tesla is nothing more then a glorified cruise control. And don't throw the number of miles driven number back.
Remains to be seen. I can't imagine not wanting to own my own car. It's an extension of personal space for me. And I don't really want anyone else using it either.
The grand vision of Tesla and what's driven the price up does not exist. If you were to ask someone the idea of Tesla and why it's worth so much I'm sure you'd hear an "imaginative" answer.
Personally, I don't believe that Tesla will capture the auto market in a way that justifies the current price. It's a great company, with the great product, but the market is overcrowded, and I am sure that the margins will suffer because of this.
It's back to where it was in June, still almost 2x from where the stock was in December.
I had my entire net worth in Tesla for a while (financial advisors do not recommend this - http://www.marketwatch.com/story/elon-musk-to-the-guy-who-in...), and even I thought the current price was a little bullish for my taste. This price is still high but a little more back-to-reality than toying with $400/share was.
Unless such financial advisor is Warren Buffet, who said "Diversification is protection against ignorance. It makes little sense if you know what you are doing."
Warren Buffett's net worth is spread across many more than 1 equity. (Yes, his wealth is in a single holding company, but that company owns a diverse array of businesses.)
It's also interesting that no one provides a source for that supposed attribution.
Everybody has ignorance to some extent in the market that is driven not just by carefully calculated fundamentals but also natural disasters, market changes, popularity and many other essentially random factors.
Ok, two major events just happened that could influence Tesla stock -- the Goldman Sachs report and the Volvo statement about ceasing production of pure fossil-fuel cars. Why is the drop attributed exclusively to the former?
Because that's what the title of the article said. (approximately). Anyway, I would have made the same point. Also, delivery numbers kind of disappointing. Also, oil price collapse. Also, the market has been sniping some of the top speculatives lately. etc. I think we rather consistently underestimate the complexity of the market.
Ha! Trump just deregulated a whole bunch of things. What makes you think this is not possible in Trump's America where more than half of Congress is made up of Billionaires or people strongly funded by Billionaires?
Those who keep repeating that Tesla stock is "overvalued" should understand that a stock's "value" is based on the current value of all future cash flows. Ford and basically all the other incumbent car companies are generating profits now, but are stagnant and waiting to be disrupted. Meanwhile Tesla's revenue is $7B last year, will be $10B+ this year, $20B+ next year, and $60B in 2020. Which companies are overvalued and which would you rather own?
There's a reason Wal-Mart's top and bottom lines are both several times that of Amazon, yet Amazon is now worth twice as much as Wal-Mart. It's about growth and future addressable market.