Anyone else a Tesla investor?

[NW-Bound]

Tesla is trying for 500,000 cars in 2020. Total car production of the world is 92 million.

If Tesla already has such a high market cap that is the sum of several major car makers, while producing such a small number of cars (0.5%) compared to the total production number of the incumbents, then what will happen when Tesla manages to drive all of them out of business and become THE car maker of the world?

Will Tesla stock then become 99% the total value of the S&P? Imagine that current stock indexers no longer need to buy 500 stocks, and just buy Tesla alone to capture 99% of the index.

It's mind boggling.

PS. If Tesla can deliver all that it promises, then it will not produce 92 million cars/year. Remember about ride sharing and Tesla 3's autonomous driving turning any car into a taxi? The world would not need as many cars. Musk also claimed his cars will last 1,000,000 miles.

[triangle]

I have never owned Tesla as an individual stock and likely never will. I have watched Cathie Wood of Ark Investment Management speak about the company a few times, talk about why she thinks it will go higher, but I could never comfortable with it as a long term investment.

Maybe they have an advantage in battery technology/production and autonomous software but I believe there is too much competition to justify their current valuation. And frankly over the past 5+ years I have expected some big government smackdown or big lawsuits regarding the autonomous driving aspect as currently being practiced out on public roads to the extent that it might damage the company.

[Zathras]

Quote:

Originally Posted by NW-Bound Tesla is trying for 500,000 cars in 2020. Total car production of the world is 92 million. If Tesla already has such a high market cap that is the sum of several major car makers, while producing such a small number of cars (0.5%) compared to the total production number of the incumbents, then what will happen when Tesla manages to drive all of them out of business and become THE car maker of the world?...

How can Microsoft have such a big market cap when they produce no cars?
Yes, Tesla does build cars and they do a lot of other things too.
In addition, they are seen as the market leader in a market that has a huge amount of potential, with very little competition.

Analysts that consider Tesla only on the number of cars they build have been wrong for years. Analysts who also consider the state of competition, the energy side of the business, the cost savings/margin of sales, and Tesla’s infrastructure plans, those are the ones that are generally closer to the mark.

Some people have been stating that the “competition” will chew up Tesla have been stating that for 8 years. They don’t seem to realize that Tesla wants competition. I think Elon is getting frustrated with how long it is taking for the competition to get their act together.

[Car-Guy]

Not me... Besides not liking EV's, I just I haven't seen many on the road.... Like maybe 1 every few months. (Yes I know, it's where I live)

Just this morning I heard on the business news that Consumer Reports ranked Tesla 25th out of 26 brands for reliability... Hey they said it, not me.

With that said, I might consider it (hey money is money) but I'd buy it as one of my shorter term speculations buys... That too may change at some point.

[Fermion]

Consider that Tesla now has the market cap equal to ALL other auto manufacturers. If all of the others went out of business then the auto industry as a whole (consisting only of Tesla) would have a similar market cap to before Tesla showed up.

Either all of the other car manufacturers were drastically undervalued before Tesla came along, the demand for any type of car is going to skyrocket like it has never done since the horse (and with more telecommuting I don't really see this), the cost and profit of making a car is going to skyrocket, or Tesla is very very overvalued.

You pick.

[NW-Bound]

Quote:

Originally Posted by Zathras How can Microsoft have such a big market cap when they produce no cars? Yes, Tesla does build cars and they do a lot of other things too. In addition, they are seen as the market leader in a market that has a huge amount of potential, with very little competition. Analysts that consider Tesla only on the number of cars they build have been wrong for years. Analysts who also consider the state of competition, the energy side of the business, the cost savings/margin of sales, and Tesla’s infrastructure plans, those are the ones that are generally closer to the mark. Some people have been stating that the “competition” will chew up Tesla have been stating that for 8 years. They don’t seem to realize that Tesla wants competition. I think Elon is getting frustrated with how long it is taking for the competition to get their act together.

I have read that sales of Tesla cars in China is under fierce competition from domestic car makers. European car makers are also ramping up quickly.

Yes, Tesla is involved also in residential solar energy, and solar energy storage. But here, it is not without competition. Tesla has the unique roof tile solar cell, but it is expensive. Existing solar panel makers are cranking out conventional solar panels so cheap, this sector has been going through huge consolidation.

Tesla is trying to make its own lithium cells, and promises some advantages over the existing cells, but Musk admitted there was a lot of work to be done. Given that he is usually more gung ho about other things that have not worked out well, I suspect that it is not going to be that easy at all. Existing lithium cell makers like LG Chem, Panasonic, BYD, CATL, are not sitting still.

About system integration and large commercial battery banks, much publicity was given to Tesla's installation in Australia, but there are larger battery storage projets going on right in California that people do not talk about. And I was surprised to learn from Alan in the UK that he was enjoying a residential battery storage that was Chinese made. As I recalled, it was a lot less expensive than Tesla's Powerwall.

About the comparison to Microsoft which has a market cap of $1.6 trillion compared to Tesla's $465 billion (29% of MS), MS has trailing annual sales of $143 billion and revenues of $44 billion (huge profit margin!), while Tesla's numbers are $24 billion and barely breaking even.

I myself think MS is also overvalued, but it is entrenched in a business that has a wide moat. Tesla on the other hand has too many competitors to count. Tesla is not a bad company, but way overvalued at this price. It will have to keep executing extremely well and meet all promises in order to earn its current price.

With the price running up so much, I think it's hard for it to go even higher for the next few years. Before bidding the shares even higher, investors will want to see how it fulfills the promises. The risks Tesla is faced with are not small.

[Chuckanut]

Quote:

Originally Posted by Zathras I’ve been an investor in TSLA since the IPO. Many analysts simply don’t understand how to view Tesla, so the range of estimates is huge. Now that Tesla has a second factory, and is in the process of building two more, I am more confident in their future than ever. Short term, who knows, long term it is very solid imho.

So, did you paper the walls of your out-house with worthless Telsa certificates after it went belly up in the Summer of 2019? Oh, wait, all those 'experts' were wrong. I guess you will have to find your wallpaper somewhere else.

I still consider Tesla speculative, and if I own any it's in a total market fund. But, all the rah-rah and pooh poohing around it will no doubt provide source data for some interesting PhD papers in the field of psychology.

I was tempted to buy a Model Y earlier this year, but decided to spend the cash on travel in 2021. Unless the Model Y is amphibious, it won't be of much use to me.

[NW-Bound]

Quote:

Originally Posted by Chuckanut So, did you paper the walls of your out-house with worthless Telsa certificates after it went belly up in the Summer of 2019? Oh, wait, all those 'experts' were wrong. I guess you will have to find your wallpaper somewhere else. I still consider Tesla speculative, and if I own any it's in a total market fund. But, all the rah-rah and pooh poohing around it will no doubt provide source data for some interesting PhD papers in the field of psychology...

Musk recently admitted in a Tweet that Tesla was about 1 month from filing bankruptcy. The comeback was amazing, but it was close.

Yes, it is highly speculative. And that's why I do not go either long nor short on Tesla. I can get decent return on other bets that are less risky. I already have more money than I spend, and do not want to deal with risks like this. Of course, everyone is entitled to bet his money as he wishes. It's just never as sure as they seem to think.

PS. By the way, the tough period of Tesla was also the time many execs at Tesla bailed out as the situation was so stressful. Even Straubel left, who was among the founders at Tesla before Musk even came on board.

PPS. I recently learned that it was Straubel who talked Musk out of the scheme of fast-swapping the car battery, and to build a supercharging network instead. I remembered that Musk did demonstrate the fast-swapping process to the media, but then nothing much came after it and the effort was abandoned. Now, I knew a bit more.

[Christine]

Quote:

Originally Posted by NW-Bound Musk recently admitted in a Tweet that Tesla was about 1 month from filing bankruptcy. The comeback was amazing, but it was close.

Yeah, but - no, but


Tesla would not have gone bankrupt. They have many friends with deep pockets.


Speculative as in many shorts and daytraders speculating their money away - sure!


Speculative as in a dangerous stock to own? Don't belive it. Disrupting the world energy markets as in replacing coal and natural peaker plants with batteries and replacing old polluting car tech with electricity. A really good idea.

[NW-Bound]

Quote:

Originally Posted by Christine Yeah, but - no, but Tesla would not have gone bankrupt. They have many friends with deep pockets. Speculative as in many shorts and daytraders speculating their money away - sure! Speculative as in a dangerous stock to own? Don't belive it. Disrupting the world energy markets as in replacing coal and natural peaker plants with batteries and replacing old polluting car tech with electricity. A really good idea.

Yes, that was the time when Musk tweeted that Tesla might go private with a buyout. It did not pan out, and the rumor was that he was talking to the Saudis, but they backed out.

I guess the Saudis also thought the deal was too speculative. Of course they now regret not buying Musk out.

But now that Tesla has gone up so much, is the stock safer now? I think the risk of bankruptcy is much reduced (perhaps even eliminated but I do not study the company finance to know about cash flow, cash on hand vs. liabilities), but that's not the same as it can keep on doubling every few months like it did recently.

Yes, the EV sector that Musk created is disruptive, and it now draws a lot more people into it. Time will tell if Musk can fight them all off.

As I said, I like to watch from the sideline because it is very interesting. Not placing bet on either side.

[Chuckanut]

Quote:

Originally Posted by NW-Bound Musk recently admitted in a Tweet that Tesla was about 1 month from filing bankruptcy. The comeback was amazing, but it was close.

Yes, Musk certainly lives on the edge much more so than most of us.

Look at SpaceX. After three failed launches he was down to his last launch attempt of the Falcon 1 rocket. And, the Falcon 1 ended up being the first privately funded rocket to put a satellite in orbit. The rest is history. Today four astronauts are working at the ISS by virtue of SpaceX and it's Crew Dragon spacecraft. Notice that a much bigger, more experienced company that received a billion more taxpayer dollars to do the same job, has yet to run an successful unmanned test of their spacecraft. Then there is recovering and re-using the first stage of the booster rocket. Another Musk Idea that was pooh-poohed by the bigger, more experience rocket companies.

I imagine he is hoping for a similar result with Tesla. Time will tell.

[NW-Bound]

It is easy to see how incumbent rocket builders failed to try to do anything new and risky. They are so used to cost-plus contracts that shield them from financial loss due to failures. And then, their management rank is filled with the type like Dilbert's pointy hair boss. I am not kidding. I worked for a few years at a place like that. I'd better stop talking about that, as it would raise my blood pressure.

On the other hand, I think that of all current automakers, and there are so many of them, there will be a few that are not as bad, and can do better to defend their turf. Maybe I am wrong (I have not worked at one).

[Christine]

I invested a little in Tesla on a hunch. Then I started to read and investigate. And that made me increase my position. What many fail to see is that Tesla is so much more than an auto maker. Then the same people get shocked by Teslas valuation.


Lately people are starting to realize this - like the analysts at Morgan Stanley:
https://news.yahoo.com/teslas-other-...122800651.html


- All of Tesla's other services will be worth more than its car business, according to one Wall Street analyst who says the company should be compared to Apple, Tinder, and more.

[NW-Bound]

I don't have anymore to add to the discussion, but will point out some factual errors.


From the article:

Quote:

His 2030 "sum of the parts" valuation gives $254 per share to Tesla's core automotive sales category, which CEO Elon Musk has said will reach 500 million units this year. That's about 47% of his total target. Tesla network services, comprising everything from the company's Supercharger network to driver-assistance software, premium infotainment, and performance upgrades — gets the next largest weight in Jonas' analysis, at $164 per share. Ride-hailing, something Musk previously said would be in place with a million self-driving by the end of 2020, will be worth $38 per share by 2030, Jonas says.

500 million units in 2020? Tesla is trying for 500K cars. The entire world production of cars is only 92 million, as I mentioned in an earlier post.

Ride-sharing with Tesla 3 autopilot in 2020? There's only 1 month left to improve the AP to the point where it can do what Waymo is doing. It requires a miracle.

The analyst may have a point, but it will help to get some facts right.

[Christine]

I agree the analyst should be able to see the difference of 500 thousand and 500 million cars. But then they probably calculate with millions and billions all the time.


I'm sure the fabled robotaxi time estimate will be delayed. The analyst used 2030 as the time for his valuation.

[NW-Bound]

I had heard of this Morgan Stanley forecast earlier, but did not check it out until now.

To be fair, the Morgan Stanley analyst Adam Jonas did not make the dumb mistake between 500K and 500 million cars. Whoever propagated his forecast added the error, plus a few more.

What the analyst said was this: he expected Tesla's production to increase from 500K cars in 2020 to 3.8 million in 2030. He assumed that the ride sharing (which does not exist yet and no sign of it on the horizon), will grow to a fleet of 500K 'robot taxis' in 2030, etc...

I learned the above from a much better summarized version of the analyst projection in an article in Financial Times. One should read this article to see what the author thinks of this.

See: https://www.ft.com/content/42509bb8-...0-292402b23c00


PS. Investors are going crazy over EVs right now, and bid every EV maker up skyhigh, not just Tesla. The FT article mentioned Nio, a Chinese EV maker. Here in the US, the market cap of Nikola was bid to tens of billion, which is remarkable considering that Nikola does not have a factory yet, and not even a real working prototype.

It's dotcoms all over again.

[HawkOwl]

Big time Tesla investor here. I bought a whopping one share earlier this year when it cost $500-ish, pre-spilt. My intention is to sell a single share when it reaches that same $500-ish number, leaving my remaining four post-spilt shares of house money alone, forever. Play money account, obviously.

[Christine]

Thank you for the FT link, NW-Bound.

It looks like people are pouring their money into anything EV after the recent climb of Tesla.


I looked into both Nikola and Nio but did not like what I saw. In Nikola I did not trust the CEO which is a turn off. And the recent allegations against Nikola strengthened my views.



And while Nio do make cars they have outsourced everything. As in given up control of their final product. Which is the same that traditional car makers like VW and Audi are doing. And they can't seem to make their EVs quite right when compared to the Tesla cars. So I've passed on those too.


Both Nikola and Nio have had great runs recently. But when I don't trust or understand what they are doing I would not know when to withdraw. So it's easier to stay away.

[NW-Bound]

Well, compared to the newcomers, Tesla's valuation looks a lot better, but it's a dangerous comparison.

When people bid up these smaller EVs, they assume that the big existing automakers cannot build these cars. I would think that Ford, GM, VW, BMW, Mercedes, etc..., who already have factories and know how to build car bodies, suspensions, etc... can get up and running with EV a lot easier and faster than these start-ups. I don't think these big guys are all stupid, and do not count them out. Of course, they are all gearing up to do a lot of EVs.

By the way, when other makers start to make and sell EVs, they will not have to pay Tesla for the "green credit", which added up to more than $400M in a recent quarter. Without the green credit, Tesla would be in the red.

And I read also that other car makers can sell their new EVs with a big loss of several $K, because they would regain the amount by not having to pay Tesla for this credit. Of course, the question is whether they have some EVs that the public wants to buy. Hence, Tesla has to stress the unique features of its cars, and the AP is one of them. And that's why Musk keeps promising things that are half-baked.

Again, this is all interesting to watch, although I have no horse in this race. I have been making good money with other stocks that I hold.

[Christine]

The old car makers should indeed be able to make decent EVs. But in my understanding they have outsourced much of the know how. Only thing they in my understanding actually do is making the engines and designing the cars. And making V8's and electric engines do not have much in common. So they will have to learn. And fast please.

Quote:

Originally Posted by NW-Bound By the way, when other makers start to make and sell EVs, they will not have to pay Tesla for the "green credit", which added up to more than $400M in a recent quarter. Without the green credit, Tesla would be in the red.

This is a common error journalists do. They subtract the green credits from Tesla's results. But they forget to subtract the taxes Tesla pay on this part of their income. If you also subtract the taxes on the green credit income then Tesla is in the green.


But I guess that would not make click bait'y headlines...