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I bought AMZN stock in 1996. Rode it up to $420 ($60 at today's prices), then back down to $14. In 2004, it was around $55. Quarter after quarter, AMZN was repo

I bought AMZN stock in 1996. Rode it up to $420 ($60 at today's prices), then back down to $14. In 2004, it was around $55. Quarter after quarter, AMZN was reporting massive losses and massive borrowing. Debt climbed to $2BB or thereabouts. I was sitting on a modest profit, and I lost faith and sold. It turns out that the massive losses and debt were because AMZN was building a monster company. Building a monster, capital-intensive company, and bringing it up fast, requires huge debt. The question at this point in TSLA's life is the growth rate. At the time I sold, AMZN's revenue were also growing at a huge rate, 40-50% annually. Write TSLA off if you want, but I've seen this movie before and those who invest for the long haul are going to be very well rewarded.

new_realist 7y ago
Amazon was almost always cash flow positive. Debts are not losses.
prepend 7y ago
That’s Amazon’s story and thousands of others that failed. Trying to paint a parallel between Tesla and Amazon based solely on they both had losses for a certain period is foolish. You’d need a lot more similarities to make the comparison useful.
- kjksf 7y ago
  His argument is not that Tesla is like Amazon because they both had losses. His argument is that Tesla's losses can be explained by investment in the future, just like Amazon invested in the future while half of wall street was telling them to make a profit. Tesla is growing revenue 50% YoY for the last decade. In Q2/2019 they delivered over 2x cars than in Q2/2018. If you can find a single company in the history of capitalism that grew that fast in a capital heavy manufacturing business then let me know. Tesla is currently building a giant factory in China (at record-breaking speed). That requires a lot of money. When they start delivering cars from that factory sometime in Q1/Q2 2020, their profitability will skyrocket because they'll flip from "lots of expenses, zero revenue" to "no expense, lots of revenue". This has happened 3 times in Tesla's history when Tesla bounced from heavy losses to profit. First when they scaled production of Model S and before they started investing in design and manufacturing of Model X. Then after they scaled production of Model X and before they started investing in design in manufacturing of Model 3. Then when they scaled production of Model 3 and before they started Model Y / european expansion / china factory.
  - gamblor956 7y ago
    If you can find a single company in the history of capitalism that grew that fast in a capital heavy manufacturing business then let me know. Ford and Toyota both grew faster than that...Hyundai too. Also GM (the original one). And Fiat. and Tata Motors... Actually, most of the big names in the automotive world grew faster than Tesla. They just didn't spend a lot of time or money constantly telling people about it because growth is irrelevant if you can't convert the growth into profits. It's easy to grow big losing money. It's much harder to grow big profitability. Outside of automotive? Apple went from nearly dead to one of the world's biggest companies in about a decade. Back in the day, the railroad and gasoline companies grew at literally exponential rates. During the shale oil boom, some companies became billionaires overnight. When they start delivering cars from that factory sometime in Q1/Q2 2020, their profitability will skyrocket because they'll flip from "lots of expenses, zero revenue" to "no expense, lots of revenue". That's not how finances or accounting work. A big factory costs lots of money to run. You have to pay for the electricity to run everything, the workers, the parts and supplies to make the cars. And you only get the revenue if you can actually sell the cars that you make. That's a big question mark in a Chinese market that has transitioned away from demanding American luxury goods. This has happened 3 times in Tesla's history when Tesla bounced from heavy losses to profit. In the financial world, we call this financial engineering. It means that you're pushing expenses or revenue into one financial period to make another financial period look better. Usually, if you know you have a bad quarter, you put as many expenses as you can into that quarter so that you can goose the numbers for your remaining quarters. Tesla openly acknowledges doing this, especially with regards to car deliveries. It's one of the reasons why their CFO left and they keep losing executives.
gamblor956 7y ago
You took the wrong lesson from Amazon. Amazon was always making money (and profits) from its core business; it was simply reinvesting its profits in expanding its business. IOW, it's growth was self-funded by revenue. Tesla has yet to manage the profitability part. Its growth is funded almost entirely by debt and capital raises, which eventually run out.

new_realist 7y ago

Amazon was almost always cash flow positive. Debts are not losses.

prepend 7y ago

That’s Amazon’s story and thousands of others that failed. Trying to paint a parallel between Tesla and Amazon based solely on they both had losses for a certain period is foolish. You’d need a lot more similarities to make the comparison useful.

kjksf 7y ago
His argument is not that Tesla is like Amazon because they both had losses. His argument is that Tesla's losses can be explained by investment in the future, just like Amazon invested in the future while half of wall street was telling them to make a profit. Tesla is growing revenue 50% YoY for the last decade. In Q2/2019 they delivered over 2x cars than in Q2/2018. If you can find a single company in the history of capitalism that grew that fast in a capital heavy manufacturing business then let me know. Tesla is currently building a giant factory in China (at record-breaking speed). That requires a lot of money. When they start delivering cars from that factory sometime in Q1/Q2 2020, their profitability will skyrocket because they'll flip from "lots of expenses, zero revenue" to "no expense, lots of revenue". This has happened 3 times in Tesla's history when Tesla bounced from heavy losses to profit. First when they scaled production of Model S and before they started investing in design and manufacturing of Model X. Then after they scaled production of Model X and before they started investing in design in manufacturing of Model 3. Then when they scaled production of Model 3 and before they started Model Y / european expansion / china factory.
- gamblor956 7y ago
  If you can find a single company in the history of capitalism that grew that fast in a capital heavy manufacturing business then let me know. Ford and Toyota both grew faster than that...Hyundai too. Also GM (the original one). And Fiat. and Tata Motors... Actually, most of the big names in the automotive world grew faster than Tesla. They just didn't spend a lot of time or money constantly telling people about it because growth is irrelevant if you can't convert the growth into profits. It's easy to grow big losing money. It's much harder to grow big profitability. Outside of automotive? Apple went from nearly dead to one of the world's biggest companies in about a decade. Back in the day, the railroad and gasoline companies grew at literally exponential rates. During the shale oil boom, some companies became billionaires overnight. When they start delivering cars from that factory sometime in Q1/Q2 2020, their profitability will skyrocket because they'll flip from "lots of expenses, zero revenue" to "no expense, lots of revenue". That's not how finances or accounting work. A big factory costs lots of money to run. You have to pay for the electricity to run everything, the workers, the parts and supplies to make the cars. And you only get the revenue if you can actually sell the cars that you make. That's a big question mark in a Chinese market that has transitioned away from demanding American luxury goods. This has happened 3 times in Tesla's history when Tesla bounced from heavy losses to profit. In the financial world, we call this financial engineering. It means that you're pushing expenses or revenue into one financial period to make another financial period look better. Usually, if you know you have a bad quarter, you put as many expenses as you can into that quarter so that you can goose the numbers for your remaining quarters. Tesla openly acknowledges doing this, especially with regards to car deliveries. It's one of the reasons why their CFO left and they keep losing executives.

gamblor956 7y ago

You took the wrong lesson from Amazon. Amazon was always making money (and profits) from its core business; it was simply reinvesting its profits in expanding its business. IOW, it's growth was self-funded by revenue. Tesla has yet to manage the profitability part. Its growth is funded almost entirely by debt and capital raises, which eventually run out.