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"Wall Street" is not betting on them to go bankrupt. Collectively, investors value this company that produces, at best, 7K cars a week at $45 billion. The ide

"Wall Street" is not betting on them to go bankrupt. Collectively, investors value this company that produces, at best, 7K cars a week at $45 billion. The idea that one quarter of profitability achieved through slashing capex to the bone fundamentally would fundamentally change their valuation doesn't carry much water in my view.

rcMgD2BwE72F 8y ago
>Collectively, investors value this company (...) Most large investors are just holding. The small amount of shares that are exchanged every day are bought/sold by speculators and they are backed by institutions that get paid for this intraday activity. Also, with all the short positions on TSLA, the bank are risking an almost infinite sum of money (in case of a short squeeze). Since Tesla doesn't intend to raise capital for the foreseeable future, banks can only gain from volatility or from a major event that would force Tesla to raise funds.
- compcoffee 8y ago
  >The small amount of shares that are exchanged every day are bought/sold by speculators and they are backed by institutions that get paid for this intraday activity. The largest shareholders were dumping shares last disclosure. Do you have data that says otherwise?
Retric 8y ago
Tesla is more than just a car manufacture. I doubt self driving + solar + battery + charging network etc is worth the kind premium they have over just being a car company. But, analysis based strictly on car sales a mistake, especially as established car companies outsource so much parts production.
- jacquesm 8y ago
  The Solar is a liability.
- scottkduncan 8y ago
  Agree with Jacques M on solar, and would also add that much of the battery tech is Panasonic's and self-driving is a long ways away from being road-ready.
  - Retric 8y ago
    In terms of cash flow I agree. But, if you had a company that just did self driving and had as many cars on the road as Tesla does people would value it. Likewise for a giant battery factory, or a company putting out those solar shingles even with just a handful of installs. Now suppose they sell those lines of business off to some other company to free up some capital. It's a path through the cash crunch that may catch people off guard. PS: I am not saying buy the stock, but I don't think it's dropping enough to become a 45 billion dollar company any time soon.
    - seebee 8y ago
      How are they going to sell the battery factory when it's owned by Panasonic, not Tesla?
      - Retric 8y ago
        Panasonic is a partner Tesla still put up money for the factory. EX: Several companies could sell Hulu to free up some cash. The Walt Disney Company (30%), 21st Century Fox (30%), Comcast (30%), AT&T (10%)
dragontamer 8y ago
> "Wall Street" is not betting on them to go bankrupt. 27.88% of all shares in existence are short-sold. Its one of the biggest shorts on the market at the moment. Wall Street is CERTAINLY betting that they're going down.
- whatok 8y ago
  There's a difference between overvalued and bankrupt.
  - dragontamer 8y ago
    That's a solid point, and I guess the stock market is a bad figure to talk about bankruptcy. Instead, we can look at the Bond market for that. Moody's rates Tesla 2025 bonds at Caa1, and today the interest rate on Tesla has risen above 8.8% The bond market certainly is pricing in the risk of default and/or bankruptcy at this point. 9%ish bonds are really bad on a 7-year bond, especially in today's market that's got relatively low-interest rate.
    - whatok 8y ago
      I work at a hedge fund specializing in corporate credit. No serious market participants think that Tesla is going actually bankrupt but does run the risk of debt restructuring. Bankruptcy vs debt restructuring would happen under very different terms. As a better metric clogged by less noise, Tesla 1yr CDS is pricing in a 12% chance of default while 2yr is 20%. The bonds you mentioned should actually be a lot lower but they had a large retail allocation and are hard to borrow to short. BTW, you mention the "interest rate" on those bonds when I think you meant yield. Very big difference.
      - phamilton 8y ago
        > BTW, you mention the "interest rate" on those bonds when I think you meant yield. Very big difference. I'm not very knowledgeable here, but is the key difference that yield is more a result of the market (i.e. bonds fluxuate in value but the return on the bond itself is fixed, so the yield reflects the relationship between cost and payout)?

rcMgD2BwE72F 8y ago

>Collectively, investors value this company (...) Most large investors are just holding. The small amount of shares that are exchanged every day are bought/sold by speculators and they are backed by institutions that get paid for this intraday activity. Also, with all the short positions on TSLA, the bank are risking an almost infinite sum of money (in case of a short squeeze). Since Tesla doesn't intend to raise capital for the foreseeable future, banks can only gain from volatility or from a major event that would force Tesla to raise funds.

compcoffee 8y ago
>The small amount of shares that are exchanged every day are bought/sold by speculators and they are backed by institutions that get paid for this intraday activity. The largest shareholders were dumping shares last disclosure. Do you have data that says otherwise?

Retric 8y ago

Tesla is more than just a car manufacture. I doubt self driving + solar + battery + charging network etc is worth the kind premium they have over just being a car company. But, analysis based strictly on car sales a mistake, especially as established car companies outsource so much parts production.

jacquesm 8y ago
The Solar is a liability.
scottkduncan 8y ago
Agree with Jacques M on solar, and would also add that much of the battery tech is Panasonic's and self-driving is a long ways away from being road-ready.
- Retric 8y ago
  In terms of cash flow I agree. But, if you had a company that just did self driving and had as many cars on the road as Tesla does people would value it. Likewise for a giant battery factory, or a company putting out those solar shingles even with just a handful of installs. Now suppose they sell those lines of business off to some other company to free up some capital. It's a path through the cash crunch that may catch people off guard. PS: I am not saying buy the stock, but I don't think it's dropping enough to become a 45 billion dollar company any time soon.
  - seebee 8y ago
    How are they going to sell the battery factory when it's owned by Panasonic, not Tesla?
    - Retric 8y ago
      Panasonic is a partner Tesla still put up money for the factory. EX: Several companies could sell Hulu to free up some cash. The Walt Disney Company (30%), 21st Century Fox (30%), Comcast (30%), AT&T (10%)

dragontamer 8y ago

> "Wall Street" is not betting on them to go bankrupt. 27.88% of all shares in existence are short-sold. Its one of the biggest shorts on the market at the moment. Wall Street is CERTAINLY betting that they're going down.

whatok 8y ago
There's a difference between overvalued and bankrupt.
- dragontamer 8y ago
  That's a solid point, and I guess the stock market is a bad figure to talk about bankruptcy. Instead, we can look at the Bond market for that. Moody's rates Tesla 2025 bonds at Caa1, and today the interest rate on Tesla has risen above 8.8% The bond market certainly is pricing in the risk of default and/or bankruptcy at this point. 9%ish bonds are really bad on a 7-year bond, especially in today's market that's got relatively low-interest rate.
  - whatok 8y ago
    I work at a hedge fund specializing in corporate credit. No serious market participants think that Tesla is going actually bankrupt but does run the risk of debt restructuring. Bankruptcy vs debt restructuring would happen under very different terms. As a better metric clogged by less noise, Tesla 1yr CDS is pricing in a 12% chance of default while 2yr is 20%. The bonds you mentioned should actually be a lot lower but they had a large retail allocation and are hard to borrow to short. BTW, you mention the "interest rate" on those bonds when I think you meant yield. Very big difference.
    - phamilton 8y ago
      > BTW, you mention the "interest rate" on those bonds when I think you meant yield. Very big difference. I'm not very knowledgeable here, but is the key difference that yield is more a result of the market (i.e. bonds fluxuate in value but the return on the bond itself is fixed, so the yield reflects the relationship between cost and payout)?