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It makes a bit more sense if you think about Tesla's valuation as a bet on future potential. Ford will probably stay at about the same size and make the same ki

It makes a bit more sense if you think about Tesla's valuation as a bet on future potential. Ford will probably stay at about the same size and make the same kind of money, at least for the foreseeable future. Tesla on the other hand is more of a gamble, who could end up being extremely big if things pan out for them. And at least right now, investors seem to think that Tesla will become wildly successful eventually. Will that actually happen? Who knows.

pure_ambition 9y ago
Keep in mind that new car sales in the US are at their lowest since 2010, and not getting any higher, so if anything there is also a possibility that Ford might make less money in the future.
eip 9y ago
> Tesla on the other hand is more of a gamble, who could end up being extremely big They would have to get 60X bigger in terms of output to get where Ford already is and has been for a long time.
- pwinnski 9y ago
  So 120x to justify their current stock price. Do people really think that Tesla will grow 120x larger with 100% probability? Or 240x larger with 50% possibility? That seems irrational to me.
  - underwater 9y ago
    Or Ford could shrink to 1/120th of its current size.
vanattab 9y ago
"It makes a bit more sense if you think about Tesla's valuation as a bet on future potential." In my opinion that's a very small bit that can't possible justify the current price. If I was going to justify investing Tesla today I would have to make the case to myself that my ROI on Tesla would be better then my other possible ROI I could get else where. Let's say I am hoping for a very reasonable 6.5% return, based on rule of 72 I would expect the value to double in ~ 11 years. Assuming Ford grows at a similar rate over the next eleven years Tesla would have 4x the market cap as Ford currently does. I just don't see how you could expect to invest at the current levels and expect a reasonable return. Even if Tesla perfectly executes for the next 11 years there is no way it would be worth it's current evaluation let alone have room for a decent ROI.

pure_ambition 9y ago

Keep in mind that new car sales in the US are at their lowest since 2010, and not getting any higher, so if anything there is also a possibility that Ford might make less money in the future.

eip 9y ago

> Tesla on the other hand is more of a gamble, who could end up being extremely big They would have to get 60X bigger in terms of output to get where Ford already is and has been for a long time.

pwinnski 9y ago
So 120x to justify their current stock price. Do people really think that Tesla will grow 120x larger with 100% probability? Or 240x larger with 50% possibility? That seems irrational to me.
- underwater 9y ago
  Or Ford could shrink to 1/120th of its current size.

vanattab 9y ago

"It makes a bit more sense if you think about Tesla's valuation as a bet on future potential." In my opinion that's a very small bit that can't possible justify the current price. If I was going to justify investing Tesla today I would have to make the case to myself that my ROI on Tesla would be better then my other possible ROI I could get else where. Let's say I am hoping for a very reasonable 6.5% return, based on rule of 72 I would expect the value to double in ~ 11 years. Assuming Ford grows at a similar rate over the next eleven years Tesla would have 4x the market cap as Ford currently does. I just don't see how you could expect to invest at the current levels and expect a reasonable return. Even if Tesla perfectly executes for the next 11 years there is no way it would be worth it's current evaluation let alone have room for a decent ROI.