13 ms·

Throw This Stock Away: TSLA

23 points by gcheong 16y ago

pchristensen 16y ago
I guess there's a 90% chance he's right (Tesla is overpriced) and a 10% chance Tesla will be worth 50x in a few years. But I don't have the funds to act on that assumption.
- chegra 16y ago
  hmm. 0.10x50x$23 = $115 Given those probabilities it seem like a good investment. Or for the less risky version, dollar cost averaging. You use something like share builder: Every month invest $100. 1month - $100 price of stock 25.0 Stock own:- 4 2month - $200 price of stock 20.0 Stock own:- 9 3month - $300 price of stock 20.0 Stock own:- 14 4month - $400 price of stock 10.0 Stock own:- 24 5month - $500 price of stock 10.0 Stock own:- 34 6month - $600 price of stock 5.0 Stock own:- 54 7month - $700 price of stock 5.0 stock own:- 74 8month - $800 price of stock 5.0 stock own:- 94 9month - $900 price of stock 10.0 stock own:- 104 10month -$1000 price of stock 20.0 stock own:- 109 Overall value of stock own is 109*20 = 2180. Profit:= $2180-$1000 = $1180 This is an exaggerated example and I only have knowledge of dollar cost average in theory, so anybody have real world experience, jump into the conversation. http://en.wikipedia.org/wiki/Dollar_cost_averaging http://en.wikipedia.org/wiki/Dollar_cost_averaging
  - mcknz 16y ago
    Dollar cost averaging to zero is still zero. Best to stay away from hot IPO stocks until they have a history of earnings.
    - chegra 16y ago
      hmm...Risk a $1000 that can degrade to $0 or go to $50,000. The bottom is capped at $0, you cant do no worst, limited downside and unlimited upside. I think it's worth some disposable income.
      - jmm 16y ago
        Um... that's true of buying any stock, right? So I'm not sure the logic allows you to make any kind of comparative decision.
        deleted 16y ago
        [deleted]
        zackattack 16y ago
        Not quite. Most stocks don't have 50x potential. (I'm not saying that Tesla does.)
- jrockway 16y ago
  If you want to guess the price a few months out, though, you can just buy options. If you think Tesla will be $35 by mid-January, you could buy a $30 call option for something like $2 a contract. If the stock hits $35 before expiration, you'll sell the option for $500 a contract. The downside is $2, the upside is $500. I don't see any options chains for TSLA yet, though, so I am just making the first number up. But that's the idea behind options -- if you want to speculate instead of have equity in the company, buy or sell options. Much cheaper.
jeff18 16y ago
It seems like the only meat of the article is the following: > I think there are economies of scale that will fail to materialize for a company targeting to move 20,000 of its sedans annually in a couple of years. Drivers who may be drawn to the novelty may begin to fret over service and parts. That is a neat opinion, but it would be more interesting to explain in detail why he believes this. Is there any evidence that this is not possible or is it just a gut feeling without any due diligence? Basically, I think Toyota's massive investment in TSLA carries a little more weight than this article and I'd like to see some actual research before "throwing it away".
mcknz 16y ago
The Motley Fool is itself a contrary indicator. The real question is should anyone be buying equities right now....
jrockway 16y ago
I kind of agree with his F recommendation. They have nowhere to go but up, after all. I was recently looking at my own company's stock price, and considering whether to buy it. 3 years ago, the share price was about $60. Then the finance problem came along, and now it's $15 (up from $4). I don't think it has anywhere to go but up to its original value; after all, the company is bigger and stronger now. And, 1000 shares is actually affordable, and would give me the opportunity to make something like $50,000 if the company recovers. It almost feels like I'm working at a startup, except one that has billions of dollars in capital. If only we could get some IKEA furniture :)
- encoderer 16y ago
  Agreed here, too. Been dollar cost averaging into F for the last few months. I chuckle at amateur investors who too-seriously try to time the market or perform technical analysis. I just bought it because I'm young, have an abundance of dispoable income, my most recent cars have been sports sedans (Volvo then BMW) and I find much of the Ford product lineup supremely attractive.
- aresant 16y ago
  Sorry if I'm missing the obvious but what company do u work for? I'll put 1k on that bet!
  - jrockway 16y ago
    If I name the company, it makes the post sound like "investment advice" rather than "random thought going through my head".
    - deleted 16y ago
      [deleted]
mkramlich 16y ago
sell Tesla and buy Apple: wow, it's almost as if he's front-running. :) why do I say that (only half in jest)? because i bet Tesla has more room for growth than Apple in the future. my bet on Apple is that in the short-term it's going to continue to get better but in the longer term it will decline, if only because of Jobs age and health issues. I admire the guy but I think he's closer to the end of his career than the beginning, and Apple stocks are currently very very expensive whereas Tesla is stilly relative cheap in comparison. If Jobs leaves, and especially if just a few more people near the top leave, and the top of the company becomes more mediocre/tasteless/corporate-crapitude like Microsoft then I think it will flow downhill from there and they'll lose their "premium"/talent edge over Microsoft. Of course, none of us can predict the future, but that's how I'm betting.
- laserhase 16y ago
  Funny thing about Motley Fool and Apple. In 2005, I took Motley Fool's advice and sold my Apple stock. Their argument then was that the company had nowhere to go because the Windows PC market was too entrenched, especially with businesses. Maybe they could sell a few more iPods or something, but no real big growth potential. I had gotten about 50% growth to show for my investment, so I cashed out while I was ahead. 30-some bucks a share. I wish I could find the article, but it's ancient by internet standards, and probably buried by a couple of CMS migrations. My experience is only one data point, but oh wow were they wrong on that one.
Tichy 16y ago
"Consumers paid as much as $599 for the first iPhones three years ago. They're paying a third as much for superior devices now." Investment advisers who can't do the simple maths required for deciphering mobile pricing schemes? Next...
- jrockway 16y ago
  Investment advisers who can't do the simple maths required for deciphering mobile pricing schemes? Next... Keep in mind that these are the same people that gave the subprime CDOs AAA ratings.
ccarpenterg 16y ago
Yes, Tesla is cool, but it's also likely several years away from profitability I think an investment advice without a timeframe is not good advice. So for someone who is expecting a capital gain in 10 years from now this is not the best advice. I'm all for buying into Tesla when it's at least closer to proving itself This contradicts two rules of stock markets: (1) Buy the rumor, sell the news and (2) Buy cheap, sell expensive.
- jakarta 16y ago
  Does it? How exactly do you determine Tesla is cheap (or expensive)? The business is set to lose $120M this year and according to the prospectus for the stock that I'm flipping through - they are basically betting their future on the $60K model working out. I'm not saying Tesla isn't a buy, but what I am saying is that the company is next to impossible to value. So when the author says it is good to wait till the company has proven itself a bit - I think he means when we can get an inkling of what kind of money they will earn which is probably after the $60K model comes out. Being able to value what you're buying is what gets you from speculating to investing.
  - ccarpenterg 16y ago
    A long bet is not speculation. Nobody knows whether Tesla is going to fail or not. But since it's an IPO you can 'bet' that is the best price to buy in the long term. And for me speculation is buying BP's stock.
    - jakarta 16y ago
      Betting is speculating. "Speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum." And I agree - speculating is buying BP stock. David Barse of Third Avenue even said so the other day on Bloomberg. Third Avenue's ethos is to invest in companies that are "safe and cheap." Tesla is similar to BP in that you don't really have any indication of what the future will be like. In BP's case it is because nobody knows the future costs associated with the spill and how that will affect their earnings. With Tesla, the company has such a limited operating history with no history of profits that its future.
smakz 16y ago
Setting aside fool.com's slide into arbitrary pop-wall street drivel on the level of Jim Cramer, my main concern about investing in Tesla at this point is the competition. Nissan is going to have it's Leaf all electric vehicle out very soon, and not far behind is the Chevy Volt - both vehicles significantly under cut the Model S in price and will be on the market sooner. They had an OK if under whelming run with the Tesla Roadster, and I applaud Elon Musk for beating the majors to market with an all electric highway going car - but to bet the company on a luxury electric vehicle is very very dangerous. Something to consider is the recent cool response that Lexus' 200h received compared to the Prius. I will be watching from the side lines on Tesla whether they sink or swim. If people interested in the electric and alternative fuel vehicle sector, I'd recommend looking into Cummins Inc (CMI) - a company which is actually making good money in this sector, growing nicely - and may be off your radar.
fuzzmeister 16y ago
"Drivers who may be drawn to the novelty may begin to fret over service and parts." While Tesla certainly needs to build our a service and parts infrastructure, this will likely be far less challenging than with a normal car. This is because the vastly simplified nature of electric motors as compared to internal combustion, to wit: "The typical four-cylinder engine of a conventional car comprises over a hundred moving parts. By comparison, the motor of the Tesla Roadster has just one: the rotor." Such simplicity should, in theory, lead to less frequent, less expensive, and less parts-intensive maintenance.
abyssknight 16y ago
I bought a few shares of Tesla, not really to make money, more so to support the company and get in on the first U.S. car maker IPO since Ford in 1956. I've never traded before, and really had no urge to, but this was interesting and I had $100 to burn on a gamble. I bought at $18.50ish. The following day there was a high of $30. Of course, today, it's back down to about $21, but for that brief moment you could have made a bunch of money. Which explains the dip today. Personally, I like Tesla as a company and I think any investment in their company should be seen as a gamble, but a long one. This is a car company, something that has to be built and proven, not a stock that will spike due to new iPhones or what not. If you're going to buy Apple, wait for the lull. We're still on iPhone 4 volatility at the moment.

23 points by gcheong 16y ago

I guess there's a 90% chance he's right (Tesla is overpriced) and a 10% chance Tesla will be worth 50x in a few years. But I don't have the funds to act on that assumption.

chegra 16y ago
hmm. 0.10x50x$23 = $115 Given those probabilities it seem like a good investment. Or for the less risky version, dollar cost averaging. You use something like share builder: Every month invest $100. 1month - $100 price of stock 25.0 Stock own:- 4 2month - $200 price of stock 20.0 Stock own:- 9 3month - $300 price of stock 20.0 Stock own:- 14 4month - $400 price of stock 10.0 Stock own:- 24 5month - $500 price of stock 10.0 Stock own:- 34 6month - $600 price of stock 5.0 Stock own:- 54 7month - $700 price of stock 5.0 stock own:- 74 8month - $800 price of stock 5.0 stock own:- 94 9month - $900 price of stock 10.0 stock own:- 104 10month -$1000 price of stock 20.0 stock own:- 109 Overall value of stock own is 109*20 = 2180. Profit:= $2180-$1000 = $1180 This is an exaggerated example and I only have knowledge of dollar cost average in theory, so anybody have real world experience, jump into the conversation. http://en.wikipedia.org/wiki/Dollar_cost_averaging http://en.wikipedia.org/wiki/Dollar_cost_averaging
- mcknz 16y ago
  Dollar cost averaging to zero is still zero. Best to stay away from hot IPO stocks until they have a history of earnings.
  - chegra 16y ago
    hmm...Risk a $1000 that can degrade to $0 or go to $50,000. The bottom is capped at $0, you cant do no worst, limited downside and unlimited upside. I think it's worth some disposable income.
    - jmm 16y ago
      Um... that's true of buying any stock, right? So I'm not sure the logic allows you to make any kind of comparative decision.
      - deleted 16y ago
        [deleted]
      - zackattack 16y ago
        Not quite. Most stocks don't have 50x potential. (I'm not saying that Tesla does.)
jrockway 16y ago
If you want to guess the price a few months out, though, you can just buy options. If you think Tesla will be $35 by mid-January, you could buy a $30 call option for something like $2 a contract. If the stock hits $35 before expiration, you'll sell the option for $500 a contract. The downside is $2, the upside is $500. I don't see any options chains for TSLA yet, though, so I am just making the first number up. But that's the idea behind options -- if you want to speculate instead of have equity in the company, buy or sell options. Much cheaper.

jeff18 16y ago

It seems like the only meat of the article is the following: > I think there are economies of scale that will fail to materialize for a company targeting to move 20,000 of its sedans annually in a couple of years. Drivers who may be drawn to the novelty may begin to fret over service and parts. That is a neat opinion, but it would be more interesting to explain in detail why he believes this. Is there any evidence that this is not possible or is it just a gut feeling without any due diligence? Basically, I think Toyota's massive investment in TSLA carries a little more weight than this article and I'd like to see some actual research before "throwing it away".

mcknz 16y ago

The Motley Fool is itself a contrary indicator. The real question is should anyone be buying equities right now....

jrockway 16y ago

I kind of agree with his F recommendation. They have nowhere to go but up, after all. I was recently looking at my own company's stock price, and considering whether to buy it. 3 years ago, the share price was about $60. Then the finance problem came along, and now it's $15 (up from $4). I don't think it has anywhere to go but up to its original value; after all, the company is bigger and stronger now. And, 1000 shares is actually affordable, and would give me the opportunity to make something like $50,000 if the company recovers. It almost feels like I'm working at a startup, except one that has billions of dollars in capital. If only we could get some IKEA furniture :)

encoderer 16y ago
Agreed here, too. Been dollar cost averaging into F for the last few months. I chuckle at amateur investors who too-seriously try to time the market or perform technical analysis. I just bought it because I'm young, have an abundance of dispoable income, my most recent cars have been sports sedans (Volvo then BMW) and I find much of the Ford product lineup supremely attractive.
aresant 16y ago
Sorry if I'm missing the obvious but what company do u work for? I'll put 1k on that bet!
- jrockway 16y ago
  If I name the company, it makes the post sound like "investment advice" rather than "random thought going through my head".
  - deleted 16y ago
    [deleted]

mkramlich 16y ago

sell Tesla and buy Apple: wow, it's almost as if he's front-running. :) why do I say that (only half in jest)? because i bet Tesla has more room for growth than Apple in the future. my bet on Apple is that in the short-term it's going to continue to get better but in the longer term it will decline, if only because of Jobs age and health issues. I admire the guy but I think he's closer to the end of his career than the beginning, and Apple stocks are currently very very expensive whereas Tesla is stilly relative cheap in comparison. If Jobs leaves, and especially if just a few more people near the top leave, and the top of the company becomes more mediocre/tasteless/corporate-crapitude like Microsoft then I think it will flow downhill from there and they'll lose their "premium"/talent edge over Microsoft. Of course, none of us can predict the future, but that's how I'm betting.

laserhase 16y ago
Funny thing about Motley Fool and Apple. In 2005, I took Motley Fool's advice and sold my Apple stock. Their argument then was that the company had nowhere to go because the Windows PC market was too entrenched, especially with businesses. Maybe they could sell a few more iPods or something, but no real big growth potential. I had gotten about 50% growth to show for my investment, so I cashed out while I was ahead. 30-some bucks a share. I wish I could find the article, but it's ancient by internet standards, and probably buried by a couple of CMS migrations. My experience is only one data point, but oh wow were they wrong on that one.

Tichy 16y ago

"Consumers paid as much as $599 for the first iPhones three years ago. They're paying a third as much for superior devices now." Investment advisers who can't do the simple maths required for deciphering mobile pricing schemes? Next...

jrockway 16y ago
Investment advisers who can't do the simple maths required for deciphering mobile pricing schemes? Next... Keep in mind that these are the same people that gave the subprime CDOs AAA ratings.

ccarpenterg 16y ago

Yes, Tesla is cool, but it's also likely several years away from profitability I think an investment advice without a timeframe is not good advice. So for someone who is expecting a capital gain in 10 years from now this is not the best advice. I'm all for buying into Tesla when it's at least closer to proving itself This contradicts two rules of stock markets: (1) Buy the rumor, sell the news and (2) Buy cheap, sell expensive.

jakarta 16y ago
Does it? How exactly do you determine Tesla is cheap (or expensive)? The business is set to lose $120M this year and according to the prospectus for the stock that I'm flipping through - they are basically betting their future on the $60K model working out. I'm not saying Tesla isn't a buy, but what I am saying is that the company is next to impossible to value. So when the author says it is good to wait till the company has proven itself a bit - I think he means when we can get an inkling of what kind of money they will earn which is probably after the $60K model comes out. Being able to value what you're buying is what gets you from speculating to investing.
- ccarpenterg 16y ago
  A long bet is not speculation. Nobody knows whether Tesla is going to fail or not. But since it's an IPO you can 'bet' that is the best price to buy in the long term. And for me speculation is buying BP's stock.
  - jakarta 16y ago
    Betting is speculating. "Speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum." And I agree - speculating is buying BP stock. David Barse of Third Avenue even said so the other day on Bloomberg. Third Avenue's ethos is to invest in companies that are "safe and cheap." Tesla is similar to BP in that you don't really have any indication of what the future will be like. In BP's case it is because nobody knows the future costs associated with the spill and how that will affect their earnings. With Tesla, the company has such a limited operating history with no history of profits that its future.

smakz 16y ago

Setting aside fool.com's slide into arbitrary pop-wall street drivel on the level of Jim Cramer, my main concern about investing in Tesla at this point is the competition. Nissan is going to have it's Leaf all electric vehicle out very soon, and not far behind is the Chevy Volt - both vehicles significantly under cut the Model S in price and will be on the market sooner. They had an OK if under whelming run with the Tesla Roadster, and I applaud Elon Musk for beating the majors to market with an all electric highway going car - but to bet the company on a luxury electric vehicle is very very dangerous. Something to consider is the recent cool response that Lexus' 200h received compared to the Prius. I will be watching from the side lines on Tesla whether they sink or swim. If people interested in the electric and alternative fuel vehicle sector, I'd recommend looking into Cummins Inc (CMI) - a company which is actually making good money in this sector, growing nicely - and may be off your radar.

fuzzmeister 16y ago

"Drivers who may be drawn to the novelty may begin to fret over service and parts." While Tesla certainly needs to build our a service and parts infrastructure, this will likely be far less challenging than with a normal car. This is because the vastly simplified nature of electric motors as compared to internal combustion, to wit: "The typical four-cylinder engine of a conventional car comprises over a hundred moving parts. By comparison, the motor of the Tesla Roadster has just one: the rotor." Such simplicity should, in theory, lead to less frequent, less expensive, and less parts-intensive maintenance.

abyssknight 16y ago

I bought a few shares of Tesla, not really to make money, more so to support the company and get in on the first U.S. car maker IPO since Ford in 1956. I've never traded before, and really had no urge to, but this was interesting and I had $100 to burn on a gamble. I bought at $18.50ish. The following day there was a high of $30. Of course, today, it's back down to about $21, but for that brief moment you could have made a bunch of money. Which explains the dip today. Personally, I like Tesla as a company and I think any investment in their company should be seen as a gamble, but a long one. This is a car company, something that has to be built and proven, not a stock that will spike due to new iPhones or what not. If you're going to buy Apple, wait for the lull. We're still on iPhone 4 volatility at the moment.