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Institutional investors don’t like the stock because it’s a 16 year old company that’s never made a profit a year in existence. It’s pretty easy to see how that

by xkjkls 7y ago

Institutional investors don’t like the stock because it’s a 16 year old company that’s never made a profit a year in existence. It’s pretty easy to see how that could make any money manager run scared

wpietri 7y ago
Let's also note that it's down 30% from peak this year. And that the price is heavily based on hypothesized future performance. And that Musk took a hype-driven strategy that, while getting him low-cost capital and a lot of free marketing, also has downsides. In particular, it creates a population of skeptics, and increases volatility when negative events cause former believers to become skeptics.
- xkjkls 7y ago
  Tesla's hypothesized future performance has continuously been pushed out longer and longer. The consensus 2020 EPS was $18 in 2013, and by today it is a negative number. You can't push out future performance for eternity.
- Phillipharryt 7y ago
  You realise all stocks are priced based on predicted future earnings right?
  - wpietri 7y ago
    Hi! Replies generally go better if you assume people know the basics and then interpret what they said in light of that. Assuming for the moment I did know that, what do you think I might have meant?
    - Phillipharryt 7y ago
      Why would I assume you knew that? Not everyone is well versed in stocks so I was replying in case you thought tesla was unique in being priced based on speculated future earnings. I admit I said it in a pretty condescending way though.
gniv 7y ago
Amazon was kind of similar Edit: Wow, so much hate for a one-line comment. I have five replies and three downvotes as of now. I stand by my comment. I think Tesla is building long-term value (brand recognition, a reputation for innovation in an stodgy industry, technical know-how in multiple industries) that will allow them to be profitable. I know well how Amazon got here, but I don't care about the technicalities. It is the behemoth that it is because of the compounded value added over 14+ years. I see Tesla equally driven and able to take advantage of the things it puts in place now.
- dragontamer 7y ago
  Amazon made a profit in 2003 and literally every year after that. Amazon can be forgiven for losing $1.6 Billion in the 2001 recession, but their pathway to profitability was rather short all else considered. Amazon has famously low margins, but those low margins commanded a mighty profit for decades. They are not the company you want to compare against Tesla. Tesla's strategy is supposed to be luxury vehicles at high margins and relatively (relative to Ford / Toyota / its other competitors) low production. In contrast: Amazon is low margins while out-producing its competition. A very, very bad comparison.
  - xkjkls 7y ago
    Cash Flow positive every year since 2003, not necessarily profitable. (Though the were profitable for some of those years, they weren’t necessarily).
    - dragontamer 7y ago
      Amazon was profitable for nearly all years after 2003. 2003: $35 Million profit 2004: $588 Million profit 2005: $359 Million 2006: $190 Million 2007: $476 Million 2008: $645 Million 2009: $902 Million 2010: $1,152 Million 2011: $631 Million 2012: $(39) Million <--- First loss 2013: $274 Million 2014: $(241) Million <--- 2nd loss 2015: $596 Million 2016: $2,371 Million 2017: $3,033 Million 2018: $10,073 Million ---------- Aside from 2012 and 2014, Amazon was both profitable AND cash flow positive. Amazon was Cash flow positive all 15 years in this time period as well. But I'm talking net profit / net loss here. IMO: there's no valid comparison to Tesla here. Amazon is not the company you want to compare against Tesla's performance. --------- Anyway, yes, Jeff Bezos sacrificing one year or two years of profits (over 15 years) for greater long-term growth could make sense. That doesn't actually mean its healthy for Tesla to consistently lose money for 10 years straight.
elisharobinson 7y ago
So 2008 didn't happen I guess. I guess nobody in their right mind would buy and sell loans which aren't guaranteed. And I guess usable mass market EV's existed before 2018 and I guess Tesla is just running a scam .
- xkjkls 7y ago
  What does 2008 have to do with anything? A company that hasn’t made a profit for 16 straight years, especially valued at billions of dollars, should be considered a extremely risky investment
  - elisharobinson 7y ago
    Name any investment bank which started after 2008 and has some decent amount of market cap. My point is suggesting investment banks can make rational decisions is not based on facts. They make decisions which make most money or save existing investments. Aside from the level of toxic hatred on the stock what can you fault about the products they are selling nothing. Can you find another company anywhere delivering value/$ as Tesla I'm not sure.
kevstev 7y ago
The operational problems can't be understated either. Customer service experiences that are all over the map (Ranging from they came out to my driveway and fixed my car to its been in the shop for 3 months with no end in sight), production issues, QC issues, engineering issues... for every way they tend to "surprise and delight" they also tend to find ways to horrify by not nailing the basics. And you only get to play the startup card so long. Tesla is indeed a 16 year old company whose production struggles look even more troubling considering their growth isn't what anyone would really consider hockey stick, and their competitors have none of their scaling issues. Add in a leader that has shown some stability issues, and its tough to make a case for it. Personally, I root hard for Tesla the company, want to see them succeed, and after recently buying a house with a parking spot, may buy a Tesla as my next car, but I am not buying shares anytime soon.
- kire2345 7y ago
  Please have a look at Tesla's revenue growth. It is a pretty clear hockey stick graph. See in this article: https://cleantechnica.com/2019/03/24/teslas-incredible-growth-past-future-how-the-company-could-continue-hyper-growth/ https://cleantechnica.com/2019/03/24/teslas-incredible-growt... The problems with customer service and production quality are to be expected if you scale at the speed that they currently do.
  - new_realist 7y ago
    And when expenditures have been cut to the bone because of financial hemmorage. Tesla is similar to WeWork and Uber in this respect.
  - kevstev 7y ago
    If you take a look at their quarterly production numbers, things don't look so rosy- they jumped from ~25000/quarter in Q4 2017 to 80k/quarter in 2018, but have not really moved the needle that much since then- this past quarter was 96k (96,155 if you want to get pedantic). Its fine growth for sure, but certainly not in a hockey stick matter- it makes me wonder where the disconnect is- how and when are they booking the revenue, and can this be expected to continue to jump if production isn't growing accordingly. All the while, they are still losing money. This is not just about cash flow, this is about actual earnings. You have to look into where the disconnect there is as well to make a bull case.
et2o 7y ago
For the first ~10 years of existence they were barely a company. That Tesla has almost nothing in common with today's Tesla, not even Elon Musk. Not sure time since incorporation is the best metric.
- xkjkls 7y ago
  They still have 8 years as a public company. How many other companies can post losses for 8 years without Wall Street getting impatient?

by xkjkls 7y ago

wpietri 7y ago

Let's also note that it's down 30% from peak this year. And that the price is heavily based on hypothesized future performance. And that Musk took a hype-driven strategy that, while getting him low-cost capital and a lot of free marketing, also has downsides. In particular, it creates a population of skeptics, and increases volatility when negative events cause former believers to become skeptics.

xkjkls 7y ago
Tesla's hypothesized future performance has continuously been pushed out longer and longer. The consensus 2020 EPS was $18 in 2013, and by today it is a negative number. You can't push out future performance for eternity.
Phillipharryt 7y ago
You realise all stocks are priced based on predicted future earnings right?
- wpietri 7y ago
  Hi! Replies generally go better if you assume people know the basics and then interpret what they said in light of that. Assuming for the moment I did know that, what do you think I might have meant?
  - Phillipharryt 7y ago
    Why would I assume you knew that? Not everyone is well versed in stocks so I was replying in case you thought tesla was unique in being priced based on speculated future earnings. I admit I said it in a pretty condescending way though.

gniv 7y ago

Amazon was kind of similar Edit: Wow, so much hate for a one-line comment. I have five replies and three downvotes as of now. I stand by my comment. I think Tesla is building long-term value (brand recognition, a reputation for innovation in an stodgy industry, technical know-how in multiple industries) that will allow them to be profitable. I know well how Amazon got here, but I don't care about the technicalities. It is the behemoth that it is because of the compounded value added over 14+ years. I see Tesla equally driven and able to take advantage of the things it puts in place now.

dragontamer 7y ago
Amazon made a profit in 2003 and literally every year after that. Amazon can be forgiven for losing $1.6 Billion in the 2001 recession, but their pathway to profitability was rather short all else considered. Amazon has famously low margins, but those low margins commanded a mighty profit for decades. They are not the company you want to compare against Tesla. Tesla's strategy is supposed to be luxury vehicles at high margins and relatively (relative to Ford / Toyota / its other competitors) low production. In contrast: Amazon is low margins while out-producing its competition. A very, very bad comparison.
- xkjkls 7y ago
  Cash Flow positive every year since 2003, not necessarily profitable. (Though the were profitable for some of those years, they weren’t necessarily).
  - dragontamer 7y ago
    Amazon was profitable for nearly all years after 2003. 2003: $35 Million profit 2004: $588 Million profit 2005: $359 Million 2006: $190 Million 2007: $476 Million 2008: $645 Million 2009: $902 Million 2010: $1,152 Million 2011: $631 Million 2012: $(39) Million <--- First loss 2013: $274 Million 2014: $(241) Million <--- 2nd loss 2015: $596 Million 2016: $2,371 Million 2017: $3,033 Million 2018: $10,073 Million ---------- Aside from 2012 and 2014, Amazon was both profitable AND cash flow positive. Amazon was Cash flow positive all 15 years in this time period as well. But I'm talking net profit / net loss here. IMO: there's no valid comparison to Tesla here. Amazon is not the company you want to compare against Tesla's performance. --------- Anyway, yes, Jeff Bezos sacrificing one year or two years of profits (over 15 years) for greater long-term growth could make sense. That doesn't actually mean its healthy for Tesla to consistently lose money for 10 years straight.

elisharobinson 7y ago

So 2008 didn't happen I guess. I guess nobody in their right mind would buy and sell loans which aren't guaranteed. And I guess usable mass market EV's existed before 2018 and I guess Tesla is just running a scam .

xkjkls 7y ago
What does 2008 have to do with anything? A company that hasn’t made a profit for 16 straight years, especially valued at billions of dollars, should be considered a extremely risky investment
- elisharobinson 7y ago
  Name any investment bank which started after 2008 and has some decent amount of market cap. My point is suggesting investment banks can make rational decisions is not based on facts. They make decisions which make most money or save existing investments. Aside from the level of toxic hatred on the stock what can you fault about the products they are selling nothing. Can you find another company anywhere delivering value/$ as Tesla I'm not sure.

kevstev 7y ago

The operational problems can't be understated either. Customer service experiences that are all over the map (Ranging from they came out to my driveway and fixed my car to its been in the shop for 3 months with no end in sight), production issues, QC issues, engineering issues... for every way they tend to "surprise and delight" they also tend to find ways to horrify by not nailing the basics. And you only get to play the startup card so long. Tesla is indeed a 16 year old company whose production struggles look even more troubling considering their growth isn't what anyone would really consider hockey stick, and their competitors have none of their scaling issues. Add in a leader that has shown some stability issues, and its tough to make a case for it. Personally, I root hard for Tesla the company, want to see them succeed, and after recently buying a house with a parking spot, may buy a Tesla as my next car, but I am not buying shares anytime soon.

kire2345 7y ago
Please have a look at Tesla's revenue growth. It is a pretty clear hockey stick graph. See in this article: https://cleantechnica.com/2019/03/24/teslas-incredible-growth-past-future-how-the-company-could-continue-hyper-growth/ https://cleantechnica.com/2019/03/24/teslas-incredible-growt... The problems with customer service and production quality are to be expected if you scale at the speed that they currently do.
- new_realist 7y ago
  And when expenditures have been cut to the bone because of financial hemmorage. Tesla is similar to WeWork and Uber in this respect.
- kevstev 7y ago
  If you take a look at their quarterly production numbers, things don't look so rosy- they jumped from ~25000/quarter in Q4 2017 to 80k/quarter in 2018, but have not really moved the needle that much since then- this past quarter was 96k (96,155 if you want to get pedantic). Its fine growth for sure, but certainly not in a hockey stick matter- it makes me wonder where the disconnect is- how and when are they booking the revenue, and can this be expected to continue to jump if production isn't growing accordingly. All the while, they are still losing money. This is not just about cash flow, this is about actual earnings. You have to look into where the disconnect there is as well to make a bull case.

et2o 7y ago

For the first ~10 years of existence they were barely a company. That Tesla has almost nothing in common with today's Tesla, not even Elon Musk. Not sure time since incorporation is the best metric.

xkjkls 7y ago
They still have 8 years as a public company. How many other companies can post losses for 8 years without Wall Street getting impatient?