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Current amateur here. I feel like there's only one important thing to consider when comparing Tesla and Ford as investment opportunities: is their value likely
by aerovistae 10y ago
Current amateur here. I feel like there's only one important thing to consider when comparing Tesla and Ford as investment opportunities: is their value likely to increase?
With Tesla, there's an obvious path for potential massive growth. It's not guaranteed, but the potential is obvious.
With Ford, it's like any other auto manufacturer. What surprises are we expecting? What new products or innovations? Does Ford have any path, even hypothetical, to massive market share growth relative to its current position the way Tesla does? It seems clear to me that the answer is no. Even if their Bolt is a success, they're not about to dominate the market, double their sales, and double their stock. They don't have any Model 3 type event on the horizon.
So all these comparisons of financial metrics on current value, to me, seem pointless. This is the only thing that should matter (along with whatever analysis you want to use to gauge whether Tesla is likely to be able to execute on its plans, which is a more complex question-- but performance so far makes it clear that they are experiencing steady and dependable growth of production and sales with clear, well-defined plans for further future growth.)
- traviscj 10y agoIrrelevant nit that doesn't undermine your point: the Bolt is made by Chevrolet.
- aerovistae 10y agoTotally forgot, sorry. Right you are.
- dkrich 10y agoThe problem with this analysis is that it ignores current valuation. What if somebody offered to sell you 1,000 shares of ford right now for $1 each? Would you buy? Of course you would because you know that the value of one share is much higher than $1. So despite whether you think Ford has room to grow, it's very possible that the market is simply undervaluing it as a company, all things considered- assets, brand value, liabilities, etc. The question isn't necessarily "can this company grow?", it's "what is the value of this enterprise as a cash-generating vehicle?"
- aerovistae 10y agoBut I would only buy the $1 shares because I know the market value is $11. I can see that incontrovertibly. If they offered it at $11 and we were hypothesizing the real value is yet higher still, I would have no way of knowing that the market will soon come to realize the "true value" and increase the price. It would be a gamble of me betting the market comes to realize they've undervalued the company.
- dkrich 10y agoOf course. But your original point was that the only thing to consider is future growth potential and because only Tesla has room to grow that it is a better investment than Ford. My point was that regardless of growth prospects, a company can be undervalued and be a great investment if growth stagnates or even goes down. That is the basic idea behind value investing and what made Warren Buffett the 2nd wealthiest person in the world.