4 ms·

> We need a sustainable future and this is a really good effort to get parts of our society there. Even if we accept this as truth (I'm not saying it is or isn

> We need a sustainable future and this is a really good effort to get parts of our society there. Even if we accept this as truth (I'm not saying it is or isn't), the fact remains that Tesla is very overvalued compared to any other carmaker, especially when we know they are losing money on each car and will keep doing so for at least three more years. Tesla has almost as high market cap as Ford, despite selling less than 1℅ as many cars per year. Tesla had a P/E of -60 last year, projected to have -100 this year. The financial fundamentals compared to current valuation doesn't look good. Will Tesla go up or down? There is more potential downside than upside, that's for sure. Also, it's not like none of the other car companies have EVs coming out. In fact, most of them do.

vibrato 10y ago
"There is more potential downside than upside, that's for sure." This may be true over very short time horizons. But if Tesla survives 50-100 years, is it not realistic to think it could be valued at 5x - 10x current? That would be a 400% upside, versus 100% downside. I say this as a habitual short seller.(haven't traded TSLA)
- guelo 10y ago
  If 400% over 50 years = 8%/year is the most optimistic scenario then it's not very exciting.
  - ksherlock 10y ago
    and with compounding interest, it's only 5%/year.
- semi-extrinsic 10y ago
  Tesla is currently valued higher than Subaru, Fiat Chrysler and Mazda; all successful car companies selling much more cars. With the exception of Volvo and Toyota, whose value includes much more than just the car companies (like heavy industry manufacturing, commercial vehicles, Toyote even owns 0.27% of Tesla), only a ~2x increase in valuation is realistic. If they become one of the biggest car companies in the world.
  - erikpukinskis 10y ago
    They're not just a car company, they're a battery company who happens to make cars.
illumin8 10y ago
They're not losing money on each car. They're reinvesting profits in business expansion like the Gigafactory. There's a big difference.
- semi-extrinsic 10y ago
  They are losing money on each car, even when you remove the Gigafactory from the picture. They lose around $20 000 per car [1], all in all, on ~ 50 000 cars sold last year. Investments in expansion including Gigafactory last year were ~ $250 million, but they lost $1000 million. They're gambling on suddenly selling much more cars in the future, but they're constantly adjusting their sales estimates down. Mid-2014 they said they would sell 100 000 cars in 2015. The number was half of that. This year, they are on track to sell about 70 000, and they are revising guidance downwards. Also, a lot of their current sales are fully dependent on government subsidies, which we know for a fact are going to stop. In Denmark, Tesla sold 3000 cars in 2015. Then Denmark restructured the electric car subsidy to benefit smaller cars more and bigger cars less; now the price of a Tesla literally tripled, and sales in 2016 have been exactly zero. There are similar noises coming out of politicians in other key markets (like Norway, their second biggest market due to subsidies): "we didn't introduce electric car subsidies so people could go out and buy big luxury cars for cheap". [1] http://seekingalpha.com/article/3971469-tesla-manages-lose-19059-per-car-sold http://seekingalpha.com/article/3971469-tesla-manages-lose-1...
  - bjelkeman-again 10y ago
    No, Tesla Does Not Lose Money On Every Car Sold. http://seekingalpha.com/article/3968035-tesla-lose-money-every-car-sold http://seekingalpha.com/article/3968035-tesla-lose-money-eve...
    - semi-extrinsic 10y ago
      That piece is just hilarious. First it argues "selling, general and administrative expenses (SGA) are predominantly fixed figures in regards to units sold." but four paragraphs later it explains away Tesla's losses by saying "The increase in SG&A is to be expected considering Tesla's ramp up of the Gigafactory and its massive growth in general." Look, either it's independent of sales, or it's dependent. You can't have it both ways. Also, saying "we don't lose money for each car because I want to deduct the cost of administration, marketing, sales and other general expenses, since those don't really count as expenses" is just disingenious. What that article might have a point in saying is that Tesla won't lose an additional $20 000 if they sell one more car. I.e. their marginal loss is not $20k. But marginal loss is a completely different quantity from the actual loss per car; it's actually related to the derivative. If we say the loss/profit function has a given value at some point in time, the derivative can of course be completely arbitrary (positive or negative). Edit: marginal loss equals loss per car only if your loss is linear in sales with a proportionality constant of one. No-one argues this is the case, in fact, everyone agrees (and Tesla is betting heavily) that the second derivative of this function is greater than zero over a large interval (thus it can't be linear). That article is a textbook example of a strawman argument.
deleted 10y ago
[deleted]

vibrato 10y ago

"There is more potential downside than upside, that's for sure." This may be true over very short time horizons. But if Tesla survives 50-100 years, is it not realistic to think it could be valued at 5x - 10x current? That would be a 400% upside, versus 100% downside. I say this as a habitual short seller.(haven't traded TSLA)

guelo 10y ago
If 400% over 50 years = 8%/year is the most optimistic scenario then it's not very exciting.
- ksherlock 10y ago
  and with compounding interest, it's only 5%/year.
semi-extrinsic 10y ago
Tesla is currently valued higher than Subaru, Fiat Chrysler and Mazda; all successful car companies selling much more cars. With the exception of Volvo and Toyota, whose value includes much more than just the car companies (like heavy industry manufacturing, commercial vehicles, Toyote even owns 0.27% of Tesla), only a ~2x increase in valuation is realistic. If they become one of the biggest car companies in the world.
- erikpukinskis 10y ago
  They're not just a car company, they're a battery company who happens to make cars.

illumin8 10y ago

They're not losing money on each car. They're reinvesting profits in business expansion like the Gigafactory. There's a big difference.

semi-extrinsic 10y ago
They are losing money on each car, even when you remove the Gigafactory from the picture. They lose around $20 000 per car [1], all in all, on ~ 50 000 cars sold last year. Investments in expansion including Gigafactory last year were ~ $250 million, but they lost $1000 million. They're gambling on suddenly selling much more cars in the future, but they're constantly adjusting their sales estimates down. Mid-2014 they said they would sell 100 000 cars in 2015. The number was half of that. This year, they are on track to sell about 70 000, and they are revising guidance downwards. Also, a lot of their current sales are fully dependent on government subsidies, which we know for a fact are going to stop. In Denmark, Tesla sold 3000 cars in 2015. Then Denmark restructured the electric car subsidy to benefit smaller cars more and bigger cars less; now the price of a Tesla literally tripled, and sales in 2016 have been exactly zero. There are similar noises coming out of politicians in other key markets (like Norway, their second biggest market due to subsidies): "we didn't introduce electric car subsidies so people could go out and buy big luxury cars for cheap". [1] http://seekingalpha.com/article/3971469-tesla-manages-lose-19059-per-car-sold http://seekingalpha.com/article/3971469-tesla-manages-lose-1...
- bjelkeman-again 10y ago
  No, Tesla Does Not Lose Money On Every Car Sold. http://seekingalpha.com/article/3968035-tesla-lose-money-every-car-sold http://seekingalpha.com/article/3968035-tesla-lose-money-eve...
  - semi-extrinsic 10y ago
    That piece is just hilarious. First it argues "selling, general and administrative expenses (SGA) are predominantly fixed figures in regards to units sold." but four paragraphs later it explains away Tesla's losses by saying "The increase in SG&A is to be expected considering Tesla's ramp up of the Gigafactory and its massive growth in general." Look, either it's independent of sales, or it's dependent. You can't have it both ways. Also, saying "we don't lose money for each car because I want to deduct the cost of administration, marketing, sales and other general expenses, since those don't really count as expenses" is just disingenious. What that article might have a point in saying is that Tesla won't lose an additional $20 000 if they sell one more car. I.e. their marginal loss is not $20k. But marginal loss is a completely different quantity from the actual loss per car; it's actually related to the derivative. If we say the loss/profit function has a given value at some point in time, the derivative can of course be completely arbitrary (positive or negative). Edit: marginal loss equals loss per car only if your loss is linear in sales with a proportionality constant of one. No-one argues this is the case, in fact, everyone agrees (and Tesla is betting heavily) that the second derivative of this function is greater than zero over a large interval (thus it can't be linear). That article is a textbook example of a strawman argument.

deleted 10y ago

[deleted]