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The original poster appears to be confusing revenue and profit. Also, the math is imprecise or incorrect - 400,000 cars sold at $100,000 each would be $40 billi

The original poster appears to be confusing revenue and profit. Also, the math is imprecise or incorrect - 400,000 cars sold at $100,000 each would be $40 billion. In lieu of profits, is there any way to use revenue to estimate a company's valuation? Tesla has $28.6 billion in assets, according to NASDAQ[0], yet their market cap is nearly twice that. Is that a normal ratio? [0] https://www.nasdaq.com/symbol/tsla/financials?query=balance-sheet https://www.nasdaq.com/symbol/tsla/financials?query=balance-...

dragontamer 8y ago
> Tesla has $28.6 billion in assets, according to NASDAQ[0], yet their market cap is nearly twice that. Is that a normal ratio? No. Ford has $257 billion in assets for example but a smaller market cap than Tesla. One could argue that "Market cap" is a poor metric of size and that "Enterprise Value" is better. Teslas numbers move in the right direction if you're looking at Enterprise Value, but its still kinda bad in terms of classical evaluation. --------- Ultimately, the only way you square the round-hole of Tesla's balance sheet is imagining future earnings, future assets, and future growth. Alternatively, you invest because you believe in the cause and not because you plan to make money in the stock. Arguably irrational. But the world isn't really about money. I generally respect people who make that kind of decision, as long as they don't become an annoying fanboy.
- qaq 8y ago
  Ford also has $222 billion in liabilities
  - dragontamer 8y ago
    Note that enterprise value takes into account liabilities. Which is why I mentioned it. Also note that of Tesla's $28 Billion in assets, Tesla has $24-billion in liabilities. So the company is overall +$4 Billion in assets, while Ford is +$35 Billion in assets. So Ford is 9x bigger than Tesla by assets, and is also 9x bigger by (Assets - Liabilities). In either case, the metric suggests that Ford should be bigger than Tesla, and yet both Tesla's market cap AND enterprise value is larger. Clearly, no one investing cares about Tesla's current size relative to Ford. At best, people are speculating on Tesla's future growth.
    - qaq 8y ago
      I personally just want transition to electric cars to happen faster so my small investment in TSLA I pretty much consider to be a charitable donation to a worthy cause :).

dragontamer 8y ago

> Tesla has $28.6 billion in assets, according to NASDAQ[0], yet their market cap is nearly twice that. Is that a normal ratio? No. Ford has $257 billion in assets for example but a smaller market cap than Tesla. One could argue that "Market cap" is a poor metric of size and that "Enterprise Value" is better. Teslas numbers move in the right direction if you're looking at Enterprise Value, but its still kinda bad in terms of classical evaluation. --------- Ultimately, the only way you square the round-hole of Tesla's balance sheet is imagining future earnings, future assets, and future growth. Alternatively, you invest because you believe in the cause and not because you plan to make money in the stock. Arguably irrational. But the world isn't really about money. I generally respect people who make that kind of decision, as long as they don't become an annoying fanboy.

qaq 8y ago
Ford also has $222 billion in liabilities
- dragontamer 8y ago
  Note that enterprise value takes into account liabilities. Which is why I mentioned it. Also note that of Tesla's $28 Billion in assets, Tesla has $24-billion in liabilities. So the company is overall +$4 Billion in assets, while Ford is +$35 Billion in assets. So Ford is 9x bigger than Tesla by assets, and is also 9x bigger by (Assets - Liabilities). In either case, the metric suggests that Ford should be bigger than Tesla, and yet both Tesla's market cap AND enterprise value is larger. Clearly, no one investing cares about Tesla's current size relative to Ford. At best, people are speculating on Tesla's future growth.
  - qaq 8y ago
    I personally just want transition to electric cars to happen faster so my small investment in TSLA I pretty much consider to be a charitable donation to a worthy cause :).