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Tesla drops 7% after Goldman Sachs says the stock is worth $180
- samsonradu 9y agoGS is somewhat notorious for this kind of manipulations: http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405 http://www.rollingstone.com/politics/news/the-great-american...
- keketi 9y agoIf the manipulation works, was it really manipulation?
- SEJeff 9y agoThe SEC generally thinks so, and punishes those found guilty with hefty legal fines.
- FLUX-YOU 9y agoPretty sure SEC fines are just cost-of-doing-business territory for the likes of Goldman.
- ethan_g 9y agoNo, this is not the approach at any of the large banks. It's not the fine that kills you. It's when your customers lose your trust and no one trades with you any more. Goldman has a ton of competitors in all their businesses that would pounce on any angle they could use to lure away customers. Committing fraud, etc, is a quick way to lose all your customers. Plus the SEC and other regulators have a lot of political pressure to nail the big banks for any misbehavior. Big banks are paranoid about these things and have huge compliance departments to minimize the chance of anything going wrong with a regulator.
- gruturo 9y agoAbsolutely, and it should be illegal, with harsh punishments which are actually doled out
- ouid 9y agowhat?
- keketi 9y agoIf you signal to the market that a stock is overvalued and the market agrees, where's the manipulation?
- ouid 9y agoIf you signal a thing that you don't believe, as is assumed that GS was doing in the hypothetical you are responding to, then you have behaved deceptively. You are free to argue that GS does believe that Tesla is overvalued, but it is not relevant to an argument which explicitly assumes the opposite.
- 0x00000000 9y ago>the market agrees The what now? Oh, those bots that scrape news articles?
- Sohcahtoa82 9y agoUh...that's basically the definition of manipulation. I'd probably bet my life that GS did a short sell on TSLA before putting out that article.
- ProAm 9y ago"The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." [1] [1] http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405 http://www.rollingstone.com/politics/news/the-great-american...
- 0xbear 9y agoTaibbi has published "Griftopia", a book which I heartily recommend. Perhaps the least partisan of his works, because everyone in it gets it: republicans and democrats alike. Even Obama, believe it or not. He has a knack for explaining complex things in simple ways without cutting that many corners to make them understandable by mere mortals. If you are to this day not entirely sure why the financial crisis happened, you need to read this book. Dude really reminds me of the late Hunter S Thompson.
- Qub3d 9y agoThis article goes on to suggest that Goldman Sachs orchestrated global warming so it could profit on cap and trade. Seems a bit like Epileptic Trees[0] to me. [0]:http://tvtropes.org/pmwiki/pmwiki.php/Main/EpilepticTrees http://tvtropes.org/pmwiki/pmwiki.php/Main/EpilepticTrees
- redm 9y agoI just don't see Tesla becoming mainstream before traditional manufacturers fill the potential market opportunity. Volvo just announced they will only produce Hybrids in the future. [1] All the major manufacturers have hybrid programs they are bringing to the mass market. It's not that Tesla will or won't be successful, it's just that as it succeeds, it's changing the ecosystem around it. Traditional manufacturers offerings are becoming more and more attractive. I think Tesla is appealing to the tech/gadget market right now. For me, everything about Tesla cars and its buying process feels new and fresh. But.. When it comes time to buy my next car I'll probably end up going to traditional car dealerships, looking around, test driving, and picking something through a traditional channel. It's just the path of least resistance and there's a lot more variety. [1] http://www.yorkdispatch.com/story/money/business/2017/07/05/volvo-make-electric-hybrid-vehicles/103446460/ http://www.yorkdispatch.com/story/money/business/2017/07/05/...
- ocdtrekkie 9y agoI agree. I think a lot of the 'terms of use' that come with Teslas will be problematic for them, and things like the cost of repair, the strict lack of market competition, and other issues will leave a lot of room for conventional auto manufacturers to step in. The Model 3 will tell us a lot. If they can ramp up production fast enough, if they can fill orders quickly enough, if they can satisfy the 'ordinary' customer's service expectations, they may take their place in the long run as one of those 'traditional' auto manufacturers long-term. There's a lot that can be missing or not at scale in the luxury car market that won't fly at the Model 3's price point.
- worldsayshi 9y agoEven if large traditional car manufacturers switch to electric vehicles at scale, won't Tesla have quite a headstart at least when it comes to their battery production capabilities?
- krrrh 9y agoMarkets are wonderful things, and it doesn't always pay to be first. https://www.greentechmedia.com/articles/read/10-battery-gigafactories-are-now-in-progress-and-musk-may-add-4-more https://www.greentechmedia.com/articles/read/10-battery-giga...
- austenallred 9y agoIt's back to where it was in June, still almost 2x from where the stock was in December. I had my entire net worth in Tesla for a while (financial advisors do not recommend this - http://www.marketwatch.com/story/elon-musk-to-the-guy-who-invested-his-net-worth-in-tesla-we-wont-let-you-down-2016-11-17 http://www.marketwatch.com/story/elon-musk-to-the-guy-who-in...), and even I thought the current price was a little bullish for my taste. This price is still high but a little more back-to-reality than toying with $400/share was.
- antaviana 9y agoUnless such financial advisor is Warren Buffet, who said "Diversification is protection against ignorance. It makes little sense if you know what you are doing."
- justinhj 9y agoEverybody has ignorance to some extent in the market that is driven not just by carefully calculated fundamentals but also natural disasters, market changes, popularity and many other essentially random factors.
- ben_w 9y agoThe trouble is, there are plenty of people who don't know what they're doing and are unaware of it. Your financial advisor probably doesn't have the experience of the second richest man on the planet.
- gertef 9y agoWarren Buffett's net worth is spread across many more than 1 equity. (Yes, his wealth is in a single holding company, but that company owns a diverse array of businesses.) It's also interesting that no one provides a source for that supposed attribution.
- austenallred 9y agoIt is now, but it wasn't when he was younger. There aren't many companies in the world he could have 100% of his net worth in at this point.
- gregjw 9y agoMaybe it's manipulation so that insiders can get much richer by buying in as the price drops and ride the inbound wealth if the Model 3 is successful. GS complaining about a price dropping is always a self-fulfilling prophecy and hopefully, Tesla can very quickly bounce back.
- curiouslurker 9y agoSounds likely, given that GS and Elon are tight. They gave him a huge personal line of credit on extremely favorable terms!
- almost_usual 9y agoIt's a highly volatile speculative stock, the price is going to fluctuate often because it's based on imaginary value.
- solomatov 9y agoIt's not imaginary, it's just uncertain.
- almost_usual 9y agoThe grand vision of Tesla and what's driven the price up does not exist. If you were to ask someone the idea of Tesla and why it's worth so much I'm sure you'd hear an "imaginative" answer.
- solomatov 9y agoPersonally, I don't believe that Tesla will capture the auto market in a way that justifies the current price. It's a great company, with the great product, but the market is overcrowded, and I am sure that the margins will suffer because of this.
- solaxun 9y agoIt is not manipulation. The stock is tremendously overvalued and has been basically forever, but that doesn't mean it will go down. Unfortunately "fundamental value" doesn't mean shit in a popularity contest where you have a lot of retail money investing in whatever they happen to like. Although equities historically are the asset class providing the best return over the long-run, this is why I prefer bonds. With a bond, if your analysis is right, you get paid at maturity. With a stock, you can be right, and it doesn't matter. Stock is only worth what somebody will pay for it, and that can largely be determined by sentiment.
- darawk 9y agoThe same is more or less true of bonds though, no? Bond value is determined by perceived credit risk and people's feelings about the future direction of interest rates in general. Of course, eventually if you're correct you do indeed get paid by the borrower with a bond. However, the stock market will eventually fall in line with realized earnings. The only real difference is that the bond market's time horizon is fixed, whereas the stock market can stay irrational for a finite, but arbitrary amount of time.
- lambda 9y agoOr as they say, the market can remain irrational longer than you can remain solvent.
- danmaz74 9y agoMore specifically, as John Maynard Keynes said
- lambda 9y agoNot according to http://quoteinvestigator.com/2011/08/09/remain-solvent/ http://quoteinvestigator.com/2011/08/09/remain-solvent/. Apparently what Keynes said was something similar, but not that same phrasing: There is nothing so disastrous as a rational investment policy in an irrational world.
- oxryly1 9y agoWell, if Goldman Sachs says so... eye-roll
- mvpu 9y agoI guess Goldman knows better how to value a young car company that moves 5 times faster than the rest of the industry, makes mind blowing products that people want to buy without even seeing them, has an unprecedented cult following with many betting their entire 401k on the company, and has survived many near death moments and came out strong... I wonder what gives such armchair analysts conviction to comment on companies like Tesla, Amazon and Netflix who are driven by irrationality and ambition.
- matwood 9y agoI agree with everything you say, but the run up on TSLA has been pretty amazing. As a TSLA fan, even I finally capitulated and took some profit.
- grandalf 9y agoExcellent point. What's interesting about it is that a stock price contains all sorts of assumptions and information and blends it all together into one number, which is simply the last price that a share traded at based on supply and demand. Surely Goldman has baked a lot of assumptions about market expectations into this assessment, and surely Goldman is wrong about many of those assumptions and right about others. A more nuanced analysis would be a probability distribution of possible price bands at various future dates. Surely by Goldman's logic it is irrational to buy (or perhaps even to hold) Tesla stock at above $185. But Goldman's analysis would also likely have discouraged investment in many other successful firms over the years. One doesn't listen to Goldman because the advice is true, one listens to it simply to reduce the probability of major deviations from the mean across a portfolio.
- mdns33 9y agofair point.
- tcskeptic 9y agoI think the real question w/r/t manipulation is whether GS is somehow short TSLA and profits from a drop.
- solomatov 9y agoStock manipulation is a federal crime. I am sure, GS doesn't do this, otherwise feds would notice them.
- nandemo 9y agoWell, GS has done illegal things before. But yeah, I don't think they'd try to do something blatantly illegal like this. This wouldn't even appear on HN's radar if it wasn't Tesla.
- deleted 9y ago[deleted]
- nojvek 9y agoHa! Trump just deregulated a whole bunch of things. What makes you think this is not possible in Trump's America where more than half of Congress is made up of Billionaires or people strongly funded by Billionaires?
- namuol 9y agoI don't see this being mentioned anywhere, but the biggest reason I'd be wary of _any_ consumer vehicle manufacturer's high stock price is that the demand for cars will decline in the following decades as self-driving vehicles dramatically reduce the demand for ownership.
- ng12 9y agoAnd who's building the self-driving vehicles? Who's technology are they using?
- tonvei 9y agoMost likely the technology that will be used will be that of which Google is developing. Tesla is nothing more then a glorified cruise control. And don't throw the number of miles driven number back.
- solomatov 9y agoAccording to navigant research (https://www.navigantresearch.com/research/navigant-research-leaderboard-report-automated-driving https://www.navigantresearch.com/research/navigant-research-...), it's GM (who bought cruise automation), and Ford (who bought a majority share in Argo AI) who are the most advanced.
- nojvek 9y ago"who are the most advanced". Any sources for this? As far as I'm aware none of their cars are on the road in the hands of customer. Also a lot of this companies are betting on Lidar becoming magically cheaper. Buying a company doesn't necessarily mean they'll kill it. Big companies have a lot of politics and red tape before integrations can even happen. I was at MS when they bought Skype and later Nokia. Middle management blew the whole thing up.
- deleted 9y ago[deleted]
- ams6110 9y ago
- almost_usual 9y agoTesla is a Benjamin Graham textbook definition of a speculative stock. Very high risk.
- ww520 9y agoClassic unfolding of buy on rumor and sell on news. Before solid news came out, the hype drove the stock high. Now that the Model 3 news has been steadily coming out, it's time to sell. GS is just following the basic sentiment swing.
- _rpd 9y agoAnd even if you believe that the stock price should be $500, it pays to sell on something that is widely perceived by others as a sell signal and then buy back in when the stock price is lower. Very little long term information is provided by this short term drop.
- deedubaya 9y agoSomething not really mentioned here is that many of Telsa's investors aren't in it necessarily because of what the financial statements show. They're pouring money into a company they fundamentally believe in -- into a movement which they feel obligated to contribute to. The stock price is probably overvalued by the books, but for humans desperate to embrace a company who's making an attempt to make a better, cleaner world, there likely isn't a value too high. Ecological returns > monetary returns?
- jayd16 9y agoKickstarter style investing?
- hinkley 9y agoTypical argument on the Internet: Well, I like the status quo. If you don't like it, vote with your wallet and quit complaining. <six months later> Hey, everybody, look at the stupid people voting with their wallets!
- Qub3d 9y agoQuoth A. Gary Shilling: The market can remain irrational longer than you can remain solvent. TSLA is simply not responding to the market like most stocks in its sector do. That can screw with any model based on previous data, which is really the best we can do.
- callmeed 9y agoGood. When Tesla stock goes under $200/share, its basically an opportunity for free money. Take a look at the long term chart for TSLA (5+ year). The stock dips below 200 (often right around 180), then within 6 months its back over 250. Nothing to do with fundamentals, Tesla's true valuation, or technical analysis. If you have working eyeballs you can see it. If TSLA gets to 180 (which I doubt), buy some stock, make 25-50%, and thank me later.
- nandemo 9y agoWhat you're doing is technical analysis. It doesn't work.
- sova 9y agoIt's easy to dispute value without looking at all at volume.
- dave1619 9y agoI've been invested in TSLA since 2012. And there's always been people saying it's "over-valued", especially the media or folks who don't believe in Tesla's mission or potential. The best thing I've found is to work the numbers a few years out and see what you come up with. Sure, each person's forecasts will be different, but I base my numbers off of company forecasts and also Tesla's track record. 2020 deliveries: 1M vehicles (according to company guidance) Average sale price per vehicle: 900k Model 3 and Model Y x ASP $42k = $37.8B. Plus 110k Model S/X x ASP $90k = $10B. Total revenue $47.8B Gross margin = 25% (company guidance is 30%+ for Model S/X and "mid-20s" for Model 3/Y). Gross profit = $12B Operating expenses = $6B (note: It's difficult to predict operating expenses 3 years out, but Tesla will likely experience a lot of operating leverage as their sales will grow much faster than R&D and sales.) EBITDA: $6B P/E multiple: 30 (note: If targets are achieved in 2020, Tesla likely to be growing 50% year in revenue and would likely fetch a 30-40 P/E multiple.) Market cap: $180B # shares outstanding: 185M shares (currently 164M outstanding) 2020 stock price = $972 A few comments: 1. The above are my forecasts based on my beliefs that Tesla can reach their own forecasts of # vehicles delivered in 2020 and gross margins. 2. Each person has their own beliefs/ideas of Tesla. So, I'm not trying to convince anyone. 3. This model can be tweaked based on changes in # vehicles delivered, gross margin, or operating expenses... to name a few factors. So, it's not perfect but it gives the basics. 4. If you find someone bearish on TSLA and who thinks it's "overvalued", ask them to give you numbers like I have. Chances are they won't be able to. 5. The Model 3 will be the iPhone moment for autos. A sexy car that redefines transport and brings in high margins. This is why Tesla has potential to be the most valuable company in the world by 2025. 6. Tesla's moat grows as they execute faster than any other auto company. It's not appropriate to value TSLA based on other auto makers. It's like valuing AAPL in 2007 based off of Nokia and Blackberry.
- tcoppi 9y agoWow, someone on the Internet that summarizes the bull case for Tesla rationally, succinctly, and with numbers to boot!
- Aron 9y agoLooks like you might be using EBITDA wrong up there ('operating profit'). just fyi. This approach is essential but most casual investors seem to overlook it. I find it also useful to contemplate worst case and best case scenarios and orthogonal scenarios and kind of work it all together in the intuition blender. For instance, by the time your 2020 rolls around I think it will be 100% obvious that ICEs are the walking dead (who is gonna buy a new one hoping to sell it ever when 5 years down the road there's far fewer buyers?), and that autonomous ride sharing is gonna become huge, and that Tesla may not produce a lot of profit in manufacture but in software\revenue sharing, and that they may never hit high manufacture numbers at all (or may literally detach that part).
- tonylo 9y agoThe analyst in question, David Tamberrino, ranks 10,337 out of 10,667 on TipRanks, meaning he is one of the worst analysts and has been wrong all the time. Link: https://www.tipranks.com/analysts/david-tamberrino https://www.tipranks.com/analysts/david-tamberrino Those who keep repeating that Tesla stock is "overvalued" should understand that a stock's "value" is based on the current value of all future cash flows. Ford and basically all the other incumbent car companies are generating profits now, but are stagnant and waiting to be disrupted. Meanwhile Tesla's revenue is $7B last year, will be $10B+ this year, $20B+ next year, and $60B in 2020. Which companies are overvalued and which would you rather own? There's a reason Wal-Mart's top and bottom lines are both several times that of Amazon, yet Amazon is now worth twice as much as Wal-Mart. It's about growth and future addressable market.
- was_boring 9y agoIf TipRanks is accurate, how can this person be employed? Especially at a firm like GS.
- sillysaurus3 9y agoBy the pigeonhole principle, someone has to be at the bottom.
- schrodinger 9y agoThat someone doesn't have to be at GS though.
- williamscales 9y agoWell yes, but one doesn't necessarily expect the same individual to stay on the bottom. Reason dictates that an analyst would either improve or exit the pool instead of continually failing (why would a firm hire a persistently wrong analyst?) So someone has to be at the bottom, true, but I think it's odd for someone to stay at the bottom.
- QML 9y agoHow does the pidgeonhole principle apply to rankings?
- mdns33 9y agobunch of average joe's commenting on Tesla. duh huh..
- gogotsla 9y agoFor everyone in this "it's overvalued camp" - I've owned TSLA since a little after the initial IPO when Jim Cramer advised everyone to sell (https://www.youtube.com/watch?v=6nYPhi0LwO0 https://www.youtube.com/watch?v=6nYPhi0LwO0). I have heard analysts and everyone under the run yelling sell over this last 7 year run. It was overvalued at 50. It was overvalued at 100. Oh, so fair value according to GS is now 180? It's really incredible to me when everyone gets on HN and puts on their equities analyst hats. You guys get it wrong time and time again - and the same applies for REAL equity analysts who actually post analysis that people pay for. Let's not forget AMZN was a junk stock going to 0 in the nineties. In recently memory, CRM, NFLX and FB were all considered stocks that could go to 0 and no one had any business owning. I'm not even going to offer any analysis of why I'm continuing to hold my TSLA stock in this post - I'll just say that my bull thesis on the company remains true. If anything, Elon has finally kept a promise with Model 3 production. If you want the company's long history of missing promises, go watch Revenge of the Electric Car (https://en.wikipedia.org/wiki/Revenge_of_the_Electric_Car_ https://en.wikipedia.org/wiki/Revenge_of_the_Electric_Car_). Once again, the company blew past every imaginable deadline, was left for dead, and is now the highest-valued automaker in the country. The solaxun comment that was #1 when I posted this is fundamentally correct - if you want to talk valuation, go trade bonds and please leave your BS end of the world market analysis to Zerohedge.
- nonoamzn 9y agoAlso remember that AMZN went on to lose 90% of its value in the early 2000s. At what point would you consider TSLA to be overvalued? Do you have an idea of where your personal alarms start buzzing? Anyone can say the naysayers are wrong on the climb but the problem with bulls is their optimism and it would be interesting to see your working that justifies a particular price for TSLA.
- dgudkov 9y agoOk, two major events just happened that could influence Tesla stock -- the Goldman Sachs report and the Volvo statement about ceasing production of pure fossil-fuel cars. Why is the drop attributed exclusively to the former?
- Aron 9y agoBecause that's what the title of the article said. (approximately). Anyway, I would have made the same point. Also, delivery numbers kind of disappointing. Also, oil price collapse. Also, the market has been sniping some of the top speculatives lately. etc. I think we rather consistently underestimate the complexity of the market.
- DeBraid 9y agoTesla is the new Amazon. Analysts doubt its profitability, but sales & stock price march higher.
- inthewoods 9y agoI love Tesla, but I'm reminded of this quote from Scott McNealy during the first tech bubble: "[T]wo years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking!" http://blog.huncap.com/?p=34 http://blog.huncap.com/?p=34
- JumpCrisscross 9y ago> At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends Or you spend 10 years growing revenues by 10x and then, at the end of your 10th, 11th, 12th, 13th, 14th and 15th years, pay a dividend equal to 5% of revenues and earn your investors a 9.3% IRR. Or grow revenues 20x and yield them almost 25% of IRR. (Both analyses assume you close down shop at the end of Year 15 and so represent lower bounds.) High-multiple plays rely on growth. Whether that growth assumption is rational depends on the context.
- skinnymuch 9y agoTesla has dropped another 6% today. Almost 14% total. Great time to buy. If it drops below $300 price, even more so.