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Is this just an investor looking out for his fund or doing his duty pressuring companies to get their act together? The two examples, GM and Tesla, certainly se

Is this just an investor looking out for his fund or doing his duty pressuring companies to get their act together? The two examples, GM and Tesla, certainly seem to have a "wrong" stock value.

ithinkinstereo 10y ago
> Is this just an investor looking out for his fund or doing his duty pressuring companies to get their act together? Well as a fund manager his #1 concern is maximizing his fund's investment returns. He couldn't care less if GM/Tesla gets their "act together". TSLA definitely seems over-valued, but the market is betting on the possibility of Tesla massively disrupting combustion cars, which explains why TSLA stock is soaring while GM stock is stagnating/flat.
- WorldMaker 10y ago
  It seems remarkably similar to a new round of the historic Dodge v Ford [1], with an extra amount of weirdness by using corporate structures against themselves and the "fiduciary duty" that Dodge v Ford helped establish. This fund doesn't seem to care at all how well the company does, just the size of the dividend check every quarter. It seems woefully short sighted and aggressively parasitic. [1] https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company
sergiosgc 10y ago
Is TSLA stock at the wrong value? Let's layout the numbers: - Market cap: 50B - Expected return on capital: 10% - Expectable profit margin: 10% - Expectable average unitary price: 50k 50B*10%/10%/50k = 1 million vehicles. Tesla is selling about 80k vehicles yearly (at about double the above average sales price): http://www.ibtimes.com/tesla-motors-tsla-1q-2016-sales-14820-model-s-model-x-cars-were-delivered-first-three-2348000 http://www.ibtimes.com/tesla-motors-tsla-1q-2016-sales-14820... The current valuation requires an increase in volume of five to ten times. Given the sales volume evolution of the current product lineup and the entry in a lower segment, it's definitely not out of reach in a five year horizon. Add up to five years to pay accrued debt (it should amount to about 10B before Tesla reaches steady state in the known product lineup). All numbers are order-of-magnitude precision, but they surely do not point to a «certainly "wrong" stock value».
- vkou 10y ago
  It can also be argued that: The market for ~$70,0000 sedans is not so great that increasing volume 10x is reasonable, within 5 years. The margins for ~$30,000 sedans are lower then 10%. So, volume may go up 10x, but returns might not.
  - Animats 10y ago
    What seems to be happening is that the price of the Model 3 is creeping up. The base model is supposedly $35K, but you get an undersized battery, no self-driving sensors, and probably give up some other things. The typical model is currently expected to be around $50K. This is not unusual in automotive; the profits are in the overpriced upgrades. (There is now a $60,000 Ford F-150 pickup. The base price of that line is $27,110.)
    - bjelkeman-again 10y ago
      No self-driving sensors? Really? Got a source for that?
      - edsouza 10y ago
        I can't remember where source, but the model 3 will have sensors, unfortunately you need to pay extra for autopilot software to be enabled. Not sure if the pricing will be higher that the other models.
        sbierwagen 10y ago
        The self driving sensors are optional extras on both the model S and the model X. Cost is $8,000.
        bjelkeman-again 10y ago
        The sensors are not optional, they are included, but the software for autopilot and full autonomy is optional.

Is this just an investor looking out for his fund or doing his duty pressuring companies to get their act together? The two examples, GM and Tesla, certainly seem to have a "wrong" stock value.

ithinkinstereo 10y ago

> Is this just an investor looking out for his fund or doing his duty pressuring companies to get their act together? Well as a fund manager his #1 concern is maximizing his fund's investment returns. He couldn't care less if GM/Tesla gets their "act together". TSLA definitely seems over-valued, but the market is betting on the possibility of Tesla massively disrupting combustion cars, which explains why TSLA stock is soaring while GM stock is stagnating/flat.

WorldMaker 10y ago
It seems remarkably similar to a new round of the historic Dodge v Ford [1], with an extra amount of weirdness by using corporate structures against themselves and the "fiduciary duty" that Dodge v Ford helped establish. This fund doesn't seem to care at all how well the company does, just the size of the dividend check every quarter. It seems woefully short sighted and aggressively parasitic. [1] https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company

sergiosgc 10y ago

Is TSLA stock at the wrong value? Let's layout the numbers: - Market cap: 50B - Expected return on capital: 10% - Expectable profit margin: 10% - Expectable average unitary price: 50k 50B*10%/10%/50k = 1 million vehicles. Tesla is selling about 80k vehicles yearly (at about double the above average sales price): http://www.ibtimes.com/tesla-motors-tsla-1q-2016-sales-14820-model-s-model-x-cars-were-delivered-first-three-2348000 http://www.ibtimes.com/tesla-motors-tsla-1q-2016-sales-14820... The current valuation requires an increase in volume of five to ten times. Given the sales volume evolution of the current product lineup and the entry in a lower segment, it's definitely not out of reach in a five year horizon. Add up to five years to pay accrued debt (it should amount to about 10B before Tesla reaches steady state in the known product lineup). All numbers are order-of-magnitude precision, but they surely do not point to a «certainly "wrong" stock value».

vkou 10y ago
It can also be argued that: The market for ~$70,0000 sedans is not so great that increasing volume 10x is reasonable, within 5 years. The margins for ~$30,000 sedans are lower then 10%. So, volume may go up 10x, but returns might not.
- Animats 10y ago
  What seems to be happening is that the price of the Model 3 is creeping up. The base model is supposedly $35K, but you get an undersized battery, no self-driving sensors, and probably give up some other things. The typical model is currently expected to be around $50K. This is not unusual in automotive; the profits are in the overpriced upgrades. (There is now a $60,000 Ford F-150 pickup. The base price of that line is $27,110.)
  - bjelkeman-again 10y ago
    No self-driving sensors? Really? Got a source for that?
    - edsouza 10y ago
      I can't remember where source, but the model 3 will have sensors, unfortunately you need to pay extra for autopilot software to be enabled. Not sure if the pricing will be higher that the other models.
      - sbierwagen 10y ago
        The self driving sensors are optional extras on both the model S and the model X. Cost is $8,000.
        bjelkeman-again 10y ago
        The sensors are not optional, they are included, but the software for autopilot and full autonomy is optional.