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I wonder if in 300 years Musk will be mentioned in the same sentences as Genghis Khan... I've been continually amazed at how Musk has been able to generate buz

by csours 9y ago

I wonder if in 300 years Musk will be mentioned in the same sentences as Genghis Khan... I've been continually amazed at how Musk has been able to generate buzz, and then eventually execute on that buzz. For instance the Price to Earnings ratios for traditional automakers are better now than they've ever been, but Tesla has surpassed Ford and GM in market cap; but Tesla has negative P/E! Musk has done so many things his own way, and he's been successful... eventually. But there have been expensive lessons: the Falcon wing doors probably adds $20k and 6 months to the launch of the Model X. Failing to use lean manufacturing principles drives up the cost of Tesla's vehicles, and probably reduces quality; from the stories I've heard of the number of people at the end of the production line, it sounds like old GM methods. The turbo pump failure ground SpaceX launches to a halt. Will his enterprises be successful in the end? Who knows! Disclaimer: I work for a Tesla competitor.

shuntress 9y ago
I don't have information to validate or dispute this but the argument a co-worker of mine always makes is that Tesla (and Musk) are 'propped up' by government money and never should have made it this far. I would be interested to get your take on this assessment.
- danjoc 9y ago
  >'propped up' by government money It's pretty well documented, http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html http://www.latimes.com/business/la-fi-hy-musk-subsidies-2015...
- pmoriarty 9y ago
  In his Mars colonization plan announcement he himself said that the majority of money is going to come from the government (if I'm remembering right). In many ways Musk is a salesman for a certain vision that a lot of people seem to be buying in to right now. Some might even call this leadership.
Sohcahtoa82 9y ago
> but Tesla has negative P/E! P/E is a single number and doesn't tell a whole story. You're the exact type of investor that is frustrating a lot of people with your shortsightedness. Every penny they make is going back into the company for R&D. Unlike Ford and GM, Tesla is actually innovating. They're also expanding like crazy. Their earnings are low because they haven't produced much yet, but those earnings will skyrocket once the Model 3 gets released and all those reservation holders start ponying up the remaining money for their car. > the Falcon wing doors probably adds $20k and 6 months to the launch of the Model X. The Model X is already launched. It launched two years ago. > Disclaimer: I work for a Tesla competitor. It explains your FUD. At least you're honest.
- csours 9y ago
  If you don't have at least some uncertainty and doubt about how Musk does things you aren't paying enough attention. Innovation necessarily means uncertainty. I know the Model X already launched, but it launched late, and at a slower production rate than expected. Musk himself acknowledged that if he had to do it over again he probably wouldn't. My point is that innovation is expensive in time, money, and attention. Musk has learned to overcome some obstacles that traditional competitors had already overcome; but that comes with some Not Invented Here mindset. P/E is a single number, that's true, but find me a traditional manufacturer anywhere, anytime that has been rewarded by the stock market for embracing innovation so much that they have a negative P/E. Investors treat Tesla like a tech company in their valuation, not like an automaker. We'll see if that valuation method is more accurate. Anyway, I'm continually amazed by what Musk has accomplished, but it's important to acknowledge the risks.
  - Sohcahtoa82 9y ago
    > Investors treat Tesla like a tech company in their valuation, not like an automaker. Uh, because they are a tech company. They also produce batteries and solar panels, not to mention making huge strides in self-driving capabilities. Again, with the negative P/E, keep in mind that once the 400,000 Model 3 reservations start going out the door in a couple months and people need to start throwing the remaining $34,000 at them, that's going to increase their earnings by at least $13.6 billion. That's billion with a B. What will that do to their P/E? And that's assuming everyone gets the base model, which certainly won't be the case. Elon has stated he expects the average car to sell for about $43,000 with options, which would put those earnings to $16.8 billion. Certainly, there is risk, but their high valuation suggests that investors are confident in Telsa's ability to produce. I'd certainly be buying TSLA if I had enough income to make a worthwhile investment.

by csours 9y ago

shuntress 9y ago

I don't have information to validate or dispute this but the argument a co-worker of mine always makes is that Tesla (and Musk) are 'propped up' by government money and never should have made it this far. I would be interested to get your take on this assessment.

danjoc 9y ago
>'propped up' by government money It's pretty well documented, http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html http://www.latimes.com/business/la-fi-hy-musk-subsidies-2015...
pmoriarty 9y ago
In his Mars colonization plan announcement he himself said that the majority of money is going to come from the government (if I'm remembering right). In many ways Musk is a salesman for a certain vision that a lot of people seem to be buying in to right now. Some might even call this leadership.

Sohcahtoa82 9y ago

> but Tesla has negative P/E! P/E is a single number and doesn't tell a whole story. You're the exact type of investor that is frustrating a lot of people with your shortsightedness. Every penny they make is going back into the company for R&D. Unlike Ford and GM, Tesla is actually innovating. They're also expanding like crazy. Their earnings are low because they haven't produced much yet, but those earnings will skyrocket once the Model 3 gets released and all those reservation holders start ponying up the remaining money for their car. > the Falcon wing doors probably adds $20k and 6 months to the launch of the Model X. The Model X is already launched. It launched two years ago. > Disclaimer: I work for a Tesla competitor. It explains your FUD. At least you're honest.

csours 9y ago
If you don't have at least some uncertainty and doubt about how Musk does things you aren't paying enough attention. Innovation necessarily means uncertainty. I know the Model X already launched, but it launched late, and at a slower production rate than expected. Musk himself acknowledged that if he had to do it over again he probably wouldn't. My point is that innovation is expensive in time, money, and attention. Musk has learned to overcome some obstacles that traditional competitors had already overcome; but that comes with some Not Invented Here mindset. P/E is a single number, that's true, but find me a traditional manufacturer anywhere, anytime that has been rewarded by the stock market for embracing innovation so much that they have a negative P/E. Investors treat Tesla like a tech company in their valuation, not like an automaker. We'll see if that valuation method is more accurate. Anyway, I'm continually amazed by what Musk has accomplished, but it's important to acknowledge the risks.
- Sohcahtoa82 9y ago
  > Investors treat Tesla like a tech company in their valuation, not like an automaker. Uh, because they are a tech company. They also produce batteries and solar panels, not to mention making huge strides in self-driving capabilities. Again, with the negative P/E, keep in mind that once the 400,000 Model 3 reservations start going out the door in a couple months and people need to start throwing the remaining $34,000 at them, that's going to increase their earnings by at least $13.6 billion. That's billion with a B. What will that do to their P/E? And that's assuming everyone gets the base model, which certainly won't be the case. Elon has stated he expects the average car to sell for about $43,000 with options, which would put those earnings to $16.8 billion. Certainly, there is risk, but their high valuation suggests that investors are confident in Telsa's ability to produce. I'd certainly be buying TSLA if I had enough income to make a worthwhile investment.