Tesla is off the rails

[njhowie]

I remember talking to someone back in the early 2000s about EMC.. the stock was in the $75 to $100 range (maybe higher at times)... but the earnings were not there... he sold and made a good profit...


Just looked and Dell bought it for $35 per share a few years back... still a very valuable company but not the inflated price at that time...

I remember Commerce One - an Internet v1.0 B2B highflier. It went public at the usual $20-$30 price per share, before you knew it the shares were trading at $100+. At the time, shares were rising because of the low float and high demand. Management should have split the shares, but didn't, loving the skyrocketing price.

Next thing you know, the shares touched $1000, the market cap tops GM, people start coming to their senses and the shares begin a precipitous decline. Well, now management can't move quickly enough to split the shares (numerous times) to increase the float and stem the fall.

Within a couple years the company is looking at bankruptcy and never heard from again.

https://en.wikipedia.org/wiki/Commerce_One

 

[audreyh1]

As I type the stock is going up $10 a minute. Currently at $1540, a gain of 10% just today.

Pretty soon it will be worth more than all the other car companies combined.

Joining the S&P500 will push TSLA stock price up, crushing those shorts,

 

[Bluegrass]

Market growth is less of an assumption and more of a virtual certainty. And more of a paradigm shift than market growth. Henry Ford hearing talk of the need for a faster horse led to the Model T. Transportation went from horses to combustion engines. We are at the incipient stages of a market being completely turned over with a different approach.

I did, however, articulate two assumptions/conditions precedent to “long”. 1) A twenty to thirty year guesstimated time window to when we can fairly say we’ve reached the post combustion engine world; 2) Tesla’s continued existence.

Those are really the key assumptions in going long. Thus, if you believe Tesla’s very real current problems are existential, then bearish. If (effectively) you believe they still exist in 20 to 30 years, then bullish.

I would also add that that while the value of the dollar and the fed’s current levels of QE have not yet trued up (the dollar remains in a gravity defying glide path and will for a while), the equity markets are in a sorta pre-inflation mode price wise.

 

[njhowie]

Joining the S&P500 will push TSLA stock price up, crushing those shorts,

So then you should be buying shares.

Also note:

At the same time, short-interest has collapsed to its lowest since 2011, removing the possibility that these moves are a forced short squeeze

https://www.zerohedge.com/markets/t...someone-panic-buys-massively-otm-call-options

 

[pb4uski]

or options.

 

[pj.mask]

I don’t think the comparison of Tesla to a car company (ford/gm) is an accurate one. I would say cars are half their business and AI is the other half.

I was waiting for a couple years for the price to drop <300 to buy some. I waited until the price was almost 600.

I was concerned at $300 that the ‘fundamentals’ didn’t support the valuation. Today... well...

It is priced based on future anticipation. I think Tesla will be around in the future but the question to me is will they develop self drive and how will that be valued in stock?

I still think buying today will provide gains in 10 years but there is a risk:reward concern. Will it produce more gains than S&P? What is the risk.

My bet is I wish I would buy more but After growth I’m at my upper tolerance on play money/risk.

 

[njhowie]

or options.

I have the September S&P reconstitution day on my calendar and will be considering buying put options the day before.

 

[audreyh1]

So then you should be buying shares.

Also note:


https://www.zerohedge.com/markets/t...someone-panic-buys-massively-otm-call-options

Well, I meant that most of it has (probably) already happened.

 

[MRG]

One thing I firmly believe is if the internal combustion engine didn't exist in ~1900ish, and the automobile didn't exist until now there would NEVER be an ICE auto.

 

[njhowie]

One thing I firmly believe is if the internal combustion engine didn't exist in ~1900ish, and the automobile didn't exist until now there would NEVER be an ICE auto.

I disagree.

You have 100 years of economic growth and technological advances which has been enabled specifically because of how society has evolved as a direct result of the ICE engine.

Look at the price tags of the EVs today - they still cannot be produced/sold for anywhere near the price of economy cars. Take cars away from everyone for the past 100 years and where do you think we'd be today?

 

[RetiredAtThirty-eight]

ARK Investments still has their $7000 price target out there, which they went on record with well before the stock took off.

https://ark-invest.com/analyst-research/tesla-price-target/

True, but to be fair, that is a 5-year price target. TSLA won't be getting to $7,000 in the next year. It takes them a year to build new Gigafactories and, so far, they are not willing to have more than two of these giant production facilities at a time under construction.

ARK Invest is good because they are not the typical Wall Street type analysts who know about money but not the 'nuts and bolts' of modern, high-tech businesses. Since they specialize in disruptive technologies their analysts are experts in their respective fields whether that be bio-genetics, electric mobility, artificial intelligence, etc. They were hired specifically because their technical expertise allows them to seperate the wheat from the chaff.

Personally, I think their 5-year price target on Tesla is too conservative. ARK price targets were totally ridiculed by Wall Street until recently. They have new found respect in the industry and Wall Street is finally starting to get that Tesla is not just an auto manufacturer.

 

[RetiredAtThirty-eight]

Look at the price tags of the EVs today - they still cannot be produced/sold for anywhere near the price of economy cars. Take cars away from everyone for the past 100 years and where do you think we'd be today?

Who buys "economy cars" these days? The closest you get to that in the mass market would be a Toyota Prius (which electric cars are very competitive with). A smart car buyer considers the total cost of ownership.

But here's the deal. People are not buying popular EV's like the Model 3 and the Model Y because they are cheap (they start at $39K) but because they are such nice cars. Gas cars just don't compare favorably. And every year the batteries (which are the most expensive part of any EV) drop in price by about 7-10% every year. Batteries costs are no where near the bottom of the price curve yet and the chemistries just keep improving.

The bottom line - it's not long before gas cars can't even pretend to compete in an open marketplace. Because people are not stupid, they want the best value for their hard-earned money.

 

[njhowie]

Who buys "economy cars" these days? The closest you get to that in the mass market would be a Toyota Prius (which electric cars are very competitive with). A smart car buyer considers the total cost of ownership.

But here's the deal. People are not buying popular EV's like the Model 3 and the Model Y because they are cheap (they start at $39K) but because they are such nice cars. Gas cars just don't compare favorably. And every year the batteries (which are the most expensive part of any EV) drop in price by about 7-10% every year. Batteries costs are no where near the bottom of the price curve yet and the chemistries just keep improving.

The bottom line - it's not long before gas cars can't even pretend to compete in an open marketplace. Because people are not stupid, they want the best value for their hard-earned money.

That is an interesting view.

I think you may be a bit out of touch with the 99%.

 

[RetiredAtThirty-eight]

I've been hearing this conversation on this forum for quite a while about Tesla. Yet nobody every admits they were wrong.

One can consult the old Tesla thread to see who said what.

Exactly! The electric car haters were around in 2012 saying Tesla would be bankrupt within the year.

In 2013 Tesla would be bankrupt within the year. Never mind they won Motor Trends Car of the Year award. Or was it car of the decade? LOL!

In 2014 Tesla would be bankrupt within a year.

In 2015 Tesla would be bankrupt within a year.

In 2016 Tesla would be bankrupt within a year

In 2017 Tesla would be bankrupt within a year.

In 2018 Tesla would be bankrupt within a year.

In 2019 Tesla would be bankrupt within a year.

In 2020 Tesla is profitable and will soon be inducted into the S&P 500 (and in the middle of the biggest pandemic the world has seen since 2019) while traditional automakers are losing money! Because they didn't innovate their products quickly enough. They are dinosaurs in a modern world where consumers demand true value for their hard-earned money.

What I've learned is don't doubt a man who can take astronauts to space and land the rockets on an unmanned ship in the middle of the ocean for later re-use (some of their rockets have been to space over 4 or 5 times)!

 

[RetiredAtThirty-eight]

That is an interesting view.

I think you may be a bit out of touch with the 99%.

Are you saying the 99% are stupid? That they don't understand value for their money? That they are too poor to afford electric vehicles? That they don't appreciate convenience and cleanliness?

It sounds like you are trying to say the 99% are stupid barbarians who can't afford (or don't deserve) anything nice. I don't believe that.

 

[MichaelB]

Let’s watch the rhetoric please.

 

[njhowie]

Are you saying the 99% are stupid? That they don't understand value for their money? That they are too poor to afford electric vehicles? That they don't appreciate convenience and cleanliness?

It sounds like you are trying to say the 99% are stupid barbarians who can't afford (or don't deserve) anything nice. I don't believe that.

I said none of that - you did.

You said that nobody buys economy cars these days. I say that 60% of the US population do not even have $1000 in savings.

The 99% are not going to be shelling out $39,000 for a commodity needed to simply get them from point A to point B safely and reliably.

You might want to tone it down a little, otherwise this discussion will not be very productive.

 

[RetiredAtThirty-eight]

I published a list of failed auto companies from the early 1900's. I think I stopped at the "C"s, it was a long list.

Yes, it's a long list of bankrupt American auto makers. In fact, there are only two American Automakers who haven't gone bankrupt. Care to guess which two?

That's right, Ford and Tesla. Now Tesla was founded 17 years ago so they have only been around about 1/7 as long as Ford but Tesla is profitable and Ford and not.

Do you want to guess who is most likely to go bankrupt next? That's right, Ford. Because they failed to innovate fast enough. There are huge barriers to entry in this industry and Tesla has made it through the most difficult part and come out the other side without crippling debt. This achievement alone is literally unbelievable.

Why is it unbelievable? One look at your long list of failed American auto manufacturer's will tell you why!

 

[Aerides]

Most of us here are in the top 5% financially, and you'll find a vast majority have cars that cost well shy of $39k. And even few of us shopping in the Model S price ranges.

Tesla does make are lovely cars, we've just chosen to stay $30k and under for our cars, so far. And our gas consumption/mileage is negligible in ER.

In the US, the most popular new vehicle purchases are still dominated by pick ups and small SUV/Cross overs. The cars that are most popular are civics, camrys, elantras, etc.

 

[RetiredAtThirty-eight]

You said that nobody buys economy cars these days. I say that 60% of the US population do not even have $1000 in savings.

60% of the US population that doesn't have even $1000 in savings are not new car buyers, they buy used cars!

Auto manufacturers know that people without even $1000 in savings are only their customers for car parts when stuff breaks or wears out.

So I find this argument disingenuous. People that buy new Pickups and SUV's make up over half of the new car market and the average price they spend is $40K. The average is brought down to $37K when you include all new car sales. Yes, these people really can afford a new EV!

You are using an argument that is outdated. Tesla has continued to increase production over the last two years and they STILL sell every car they make almost as soon as they make it. The demand is bigger than the supply.

 

[Bluegrass]

Still hoping Old Shooter expounds on his Amazon mention above.

I don’t view AMZN as being in the company of those other companies.......but I’m no expert.

 

[RetiredAtThirty-eight]

Most of us here are in the top 5% financially, and you'll find a vast majority have cars that cost well shy of $39k.

I only have the average prices spent on new car purchases for the national (US) market. I've never surveyed fellow forum members! I know many here don't even buy new cars at all - many only buy used cars or trucks.

In the US, the most popular new vehicle purchases are still dominated by pick ups and small SUV/Cross overs. The cars that are most popular are civics, camrys, elantras, etc.

Exactly! The Model 3 is starting to displace sales of the popular cars you mentioned but it can only displace them as fast as production volumes can be ramped. They sell everyone they can make. And the Model Y crossover SUV was just released right as the pandemic was starting to hit but it's already selling like hotcakes. People love the new Model Y but Tesla can only sell them as fast as they can make them!

 

[RetiredAtThirty-eight]

Just looked.... market cap is 286.5 billion... but it is still losing money...

You are looking at outdated numbers.

Tesla has made a profit in the last 3 out of 3 quarters and is widely expected to announce a profit for the fourth straight quarter on July 22. If they announce their first loss in a year, then I agree with you, the stock will go down. Because no one is pricing a loss into the stock value.

If they announce a profit as expected, they will be inducted into the S&P 500.

Unfortunately, the other American automakers are not profitable - Tesla is the only one that is. This pandemic has been really hard on auto sales.

 

[ERD50]

One thing I firmly believe is if the internal combustion engine didn't exist in ~1900ish, and the automobile didn't exist until now there would NEVER be an ICE auto.

Odd hypothetical, but you are aware that Electric and ICE cars were on equal footing back in the early 1900's? There were even hybrids back then. And (for better or worse) the ICE won over the next hundred years.

For your hypothetical to even come close to any sort of validity, we would also have to assume that electric motors, modern solid-state motor controllers, and modern batteries (and maybe even the modern electrical grid) also didn't exist until today, and all would have to go through their evolution of improvements. Which takes us right back to the 1900's. That experiment already played out.

I don't see any relevance to today.

-ERD50

 

[ERD50]

...
Exactly! The Model 3 is starting to displace sales of the popular cars you mentioned but it can only displace them as fast as production volumes can be ramped. They sell everyone they can make. And the Model Y crossover SUV was just released right as the pandemic was starting to hit but it's already selling like hotcakes. People love the new Model Y but Tesla can only sell them as fast as they can make them!

I was interested to see how the demand in the US for the Model 3 played out, once the early adopters and fans got their fill, and the subsidies went away.

But COVID has really made it hard to make any good comparisons I think.

-ERD50