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What does HN think: Does it now make sense to invest in tesla or is the stock already inflated?

by s3nnyy 10y ago

gizmo 10y ago
Those two things aren't contradictory. A stock can be inflated for 20 years and provide great returns to investors during that period. The best investments are in stocks that are growing quickly and are valued at a low multiple of earnings. There are much better investment opportunities out there than Tesla. People invest in Tesla because they're inspired by Elon Musk or because they regret not having invested earlier on. You shouldn't make investment decisions based on those emotions. If you want to invest in the future of cars I think you'll get much better returns investing in Magna Int'l and NVIDIA.
deleted 10y ago
[deleted]
Proven 10y ago
No, it's an unethical company that greatly relies on government subsidies in the US and abroad, and the share price is ludicrous. Additionally it creates products that pollute more than their non subsidized competitors.
marvin 10y ago
It's a super volatile stock and very expensively priced. The current stock price assumes a successful Model 3 launch, and also growth beyond the Model 3 in the shape of new models, much greater market share and considerable likelihood of success with battery pack sales and solar installations. Tesla's current market cap is equal to Ford's, so a bull scenario would require Tesla to operate at higher margins, and/or higher total market-share, relative to the competition. Possibly combined one or more of the biggest traditional auto manufacturers fumbling the transition to electric and going under. (And obviously, a central thesis is that most people will want an electric rather than a combustion engine-powered vehicle in 5-10 years). On the other hand, in the best-case scenario Tesla has huge room to grow. The 4 largest auto manufacturers sell on the order of 10 million vehicles per year, to Tesla's 100.000. Note that if Tesla were to grow production this much, it would have to happen either with favorable capital raise terms, requiring less capital than is generally understood, or by having very high margins and reinvesting very aggressively. Tesla also has ambitions to become a leading energy supplier, under the thesis that solar installations will not be a commodity, but a product where superior user experience and system integration will be in demand. The bear case for this is that demand for solar installations will be limited to the cheapest supplier slapping the cheapest panels on a roof and calling it a day, or that a well-integrated solar system will be so simple to design that many companies will do it. We don't have the answer here yet, since this market is not mature. It also hinges on solar being at a tipping point where it is poised to displace a large amount of fossil power generation due to rapidly decreasing costs in cell and battery storage. Tl;dr: you wouldn't invest in Tesla today unless you have a very big risk appetite and also believe that the transportation and consumer energy landscape will look very different in 10 years.
- petra 10y ago
  On Tesla growing to millions of cars per year: at those volumes, most likely the government won't give subsidies anymore. So this means a car needs to be priced at the area of $20K( from $40k today) for a 200 miles range, and that means batteries below $100/kwh. Whether this is possible with Tesla's li-ion is a big question, some predictions i saw talk about $150/kwh as the limit, graph[1], from this nature article[2]. On the other hand, musk is predicting they will be below $100/kwh in the 2020's[3] - but that doesn't sound like a really reliable source. Also, there are possibly other battery chemistries, like li-sulfur , which could probably reach $100/kwh. Assuming it works, will it stay the giga factory(will it even fit?) with exclusivity for Tesla cars ? or more likely be available to more companies(with many new giga factories that will become established) - leading to a great situation, but maybe not a happy one for Tesla stock owners ? [1]http://energypost.eu/wp-content/uploads/2016/04/Schalk-Cloete-figure-1.png http://energypost.eu/wp-content/uploads/2016/04/Schalk-Cloet... [2]http://www.nature.com/nclimate/journal/v5/n4/full/nclimate2564.html?WT.ec_id=NCLIMATE-201504 http://www.nature.com/nclimate/journal/v5/n4/full/nclimate25... [3]https://forums.tesla.com/forum/forums/how-soon-can-tesla-get-battery-cell-costs-below-100-kilowatt-hour https://forums.tesla.com/forum/forums/how-soon-can-tesla-get...
  - Retric 10y ago
    60kwh * 150$ / kWh = 9000$. Also, electric cars can be more expencive to buy as they are much cheaper to operate as many people lease making it a pure cost per month calculation.
- Retric 10y ago
  A very important caveat when comparing car companies is they source a lot of components from a network of suppliers many of whom are worth billions. So, if Tessa is supplying the battery systems for Ford etc they can still make significant profit from that relationship without selling any cars.
  - MegaButts 10y ago
    Does Tesla sell batteries to GM for the Bolt?
eru 10y ago
If you have to ask: just buy a broad index and hold it. (If you don't have to ask, go run a hedge fund or join Goldman Sachs.)
- peteretep 10y ago
  Exactly. Unless you believe you have access to information or insight that the market does not, you're just gambling.
  - lightbyte 10y ago
    You could also just like what Tesla has been doing and want to support them by investing.
    - zorked 10y ago
      Nope, invest in what will make you money. If you like what Tesla is doing buy their products.
      - planteen 10y ago
        I completely agree you shouldn't invest from "liking" something. But it's an interesting proposition to buy their products to support them when they lose money on every car sold.
        eru 10y ago
        Actually, if markets are efficient enough, you can just buy any old thing for a good price. (Ie efficient markets preclude superior returns, but before-taxes-and-transaction-costs also protect you from inferior returns.) So the downside to investing-by-liking might not be too bad.
omarforgotpwd 10y ago
Wait a little while and the share price will crash. It does every once in a while. In my opinion the stock is richly valued right now, based on assumptions that everything will go pretty good with the Model 3 launch.

What does HN think: Does it now make sense to invest in tesla or is the stock already inflated?

by s3nnyy 10y ago

What does HN think: Does it now make sense to invest in tesla or is the stock already inflated?

gizmo 10y ago

Those two things aren't contradictory. A stock can be inflated for 20 years and provide great returns to investors during that period. The best investments are in stocks that are growing quickly and are valued at a low multiple of earnings. There are much better investment opportunities out there than Tesla. People invest in Tesla because they're inspired by Elon Musk or because they regret not having invested earlier on. You shouldn't make investment decisions based on those emotions. If you want to invest in the future of cars I think you'll get much better returns investing in Magna Int'l and NVIDIA.

deleted 10y ago

[deleted]

Proven 10y ago

No, it's an unethical company that greatly relies on government subsidies in the US and abroad, and the share price is ludicrous. Additionally it creates products that pollute more than their non subsidized competitors.

marvin 10y ago

It's a super volatile stock and very expensively priced. The current stock price assumes a successful Model 3 launch, and also growth beyond the Model 3 in the shape of new models, much greater market share and considerable likelihood of success with battery pack sales and solar installations. Tesla's current market cap is equal to Ford's, so a bull scenario would require Tesla to operate at higher margins, and/or higher total market-share, relative to the competition. Possibly combined one or more of the biggest traditional auto manufacturers fumbling the transition to electric and going under. (And obviously, a central thesis is that most people will want an electric rather than a combustion engine-powered vehicle in 5-10 years). On the other hand, in the best-case scenario Tesla has huge room to grow. The 4 largest auto manufacturers sell on the order of 10 million vehicles per year, to Tesla's 100.000. Note that if Tesla were to grow production this much, it would have to happen either with favorable capital raise terms, requiring less capital than is generally understood, or by having very high margins and reinvesting very aggressively. Tesla also has ambitions to become a leading energy supplier, under the thesis that solar installations will not be a commodity, but a product where superior user experience and system integration will be in demand. The bear case for this is that demand for solar installations will be limited to the cheapest supplier slapping the cheapest panels on a roof and calling it a day, or that a well-integrated solar system will be so simple to design that many companies will do it. We don't have the answer here yet, since this market is not mature. It also hinges on solar being at a tipping point where it is poised to displace a large amount of fossil power generation due to rapidly decreasing costs in cell and battery storage. Tl;dr: you wouldn't invest in Tesla today unless you have a very big risk appetite and also believe that the transportation and consumer energy landscape will look very different in 10 years.

petra 10y ago
On Tesla growing to millions of cars per year: at those volumes, most likely the government won't give subsidies anymore. So this means a car needs to be priced at the area of $20K( from $40k today) for a 200 miles range, and that means batteries below $100/kwh. Whether this is possible with Tesla's li-ion is a big question, some predictions i saw talk about $150/kwh as the limit, graph[1], from this nature article[2]. On the other hand, musk is predicting they will be below $100/kwh in the 2020's[3] - but that doesn't sound like a really reliable source. Also, there are possibly other battery chemistries, like li-sulfur , which could probably reach $100/kwh. Assuming it works, will it stay the giga factory(will it even fit?) with exclusivity for Tesla cars ? or more likely be available to more companies(with many new giga factories that will become established) - leading to a great situation, but maybe not a happy one for Tesla stock owners ? [1]http://energypost.eu/wp-content/uploads/2016/04/Schalk-Cloete-figure-1.png http://energypost.eu/wp-content/uploads/2016/04/Schalk-Cloet... [2]http://www.nature.com/nclimate/journal/v5/n4/full/nclimate2564.html?WT.ec_id=NCLIMATE-201504 http://www.nature.com/nclimate/journal/v5/n4/full/nclimate25... [3]https://forums.tesla.com/forum/forums/how-soon-can-tesla-get-battery-cell-costs-below-100-kilowatt-hour https://forums.tesla.com/forum/forums/how-soon-can-tesla-get...
- Retric 10y ago
  60kwh * 150$ / kWh = 9000$. Also, electric cars can be more expencive to buy as they are much cheaper to operate as many people lease making it a pure cost per month calculation.
Retric 10y ago
A very important caveat when comparing car companies is they source a lot of components from a network of suppliers many of whom are worth billions. So, if Tessa is supplying the battery systems for Ford etc they can still make significant profit from that relationship without selling any cars.
- MegaButts 10y ago
  Does Tesla sell batteries to GM for the Bolt?

eru 10y ago

If you have to ask: just buy a broad index and hold it. (If you don't have to ask, go run a hedge fund or join Goldman Sachs.)

peteretep 10y ago
Exactly. Unless you believe you have access to information or insight that the market does not, you're just gambling.
- lightbyte 10y ago
  You could also just like what Tesla has been doing and want to support them by investing.
  - zorked 10y ago
    Nope, invest in what will make you money. If you like what Tesla is doing buy their products.
    - planteen 10y ago
      I completely agree you shouldn't invest from "liking" something. But it's an interesting proposition to buy their products to support them when they lose money on every car sold.
      - eru 10y ago
        Actually, if markets are efficient enough, you can just buy any old thing for a good price. (Ie efficient markets preclude superior returns, but before-taxes-and-transaction-costs also protect you from inferior returns.) So the downside to investing-by-liking might not be too bad.

omarforgotpwd 10y ago

Wait a little while and the share price will crash. It does every once in a while. In my opinion the stock is richly valued right now, based on assumptions that everything will go pretty good with the Model 3 launch.