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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 T

by 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.
    - xkjkls 7y ago
      I guess my major point is that Amazon didn’t need to consistently find new capital in order to keep the business afloat. Musk does. That’s partyly the distinction between cash flow and profit
rodgerd 7y ago
This is not true at all.
ianferrel 7y ago
Amazon made their first quarterly profit 7 years after founding and their first annual profit 2 years later. That's longer than average, but it's also a lot shorter than 16 years.
- xkjkls 7y ago
  And they didn’t amass nearly as much debt to get there
- omgwtfbyobbq 7y ago
  Comparing pre-IPO Tesla to post-IPO Amazon is going to skew some things. I think it's better to compare post-IPO Amazon (1997) to post-IPO Tesla (2010).
xkjkls 7y ago
Amazon has been cash flow positive since 2003. Amazon has a unique negative cash flow cycle where they collected revenue significantly prior to paying their accounts payable. As long as they are constantly growing, it is basically like running a business on a credit card. Tesla is in a completely different situation. Cars require massive upfront investment before their revenue is realized, and given the results just posted, Tesla will most likely post a quarter with declining revenue. People should stop comparing things to Amazon. Amazon was successful because it was unique.
- __coaxialcabal 7y ago
  Semantics, but “negative cash conversion cycle”, not “negative cash flow cycle”.
  - xkjkls 7y ago
    You are correct; I type without proofreading
- deleted 7y ago
  [deleted]
rtempaccount1 7y ago
Not every loss making company is an Amazon in the making :) Tesla is likely coming to the end of the period where they have a relatively unique portfolio of products. We're starting to see the traditional car makers come up with competitive vehicles. Whilst Tesla may ride this out fine, it's likely to have an impact on things like margins, going forward.
- npo9 7y ago
  Is there an electric car that is a true competitor to the Model S?
  - xkjkls 7y ago
    The Model S sales are down close to 70% YoY. That’s very obviously not the platform of the future
  - rtempaccount1 7y ago
    not sure I've seen a good analogue for the Model S (yet) closest competitor for the Model X at the moment appears to be the Jaguar I-Pace. For the model three there's things like the Hyundai Kona and Renault Zoe which are becoming competitive. I don't think it's there yet, but if I was an investor looking at a 2-3 year timeline, you've got to expect increased competition as there's various models coming along from various companies. Not all of them will be successful, but it's a fair likeliness that some will be.
jeffshek 7y ago
Some slight differences :) Amazon chooses to make little/no profit as a long-term business strategy to reinvest everything. Tesla is forced to make little/no-profit as a short-term business obligation to their suppliers.
IkmoIkmo 7y ago
https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-income https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-in... https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-income https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-inc... Just compare...

by gniv 7y ago

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.
  - xkjkls 7y ago
    I guess my major point is that Amazon didn’t need to consistently find new capital in order to keep the business afloat. Musk does. That’s partyly the distinction between cash flow and profit

rodgerd 7y ago

This is not true at all.

ianferrel 7y ago

Amazon made their first quarterly profit 7 years after founding and their first annual profit 2 years later. That's longer than average, but it's also a lot shorter than 16 years.

xkjkls 7y ago
And they didn’t amass nearly as much debt to get there
omgwtfbyobbq 7y ago
Comparing pre-IPO Tesla to post-IPO Amazon is going to skew some things. I think it's better to compare post-IPO Amazon (1997) to post-IPO Tesla (2010).

xkjkls 7y ago

Amazon has been cash flow positive since 2003. Amazon has a unique negative cash flow cycle where they collected revenue significantly prior to paying their accounts payable. As long as they are constantly growing, it is basically like running a business on a credit card. Tesla is in a completely different situation. Cars require massive upfront investment before their revenue is realized, and given the results just posted, Tesla will most likely post a quarter with declining revenue. People should stop comparing things to Amazon. Amazon was successful because it was unique.

__coaxialcabal 7y ago
Semantics, but “negative cash conversion cycle”, not “negative cash flow cycle”.
- xkjkls 7y ago
  You are correct; I type without proofreading
deleted 7y ago
[deleted]

rtempaccount1 7y ago

Not every loss making company is an Amazon in the making :) Tesla is likely coming to the end of the period where they have a relatively unique portfolio of products. We're starting to see the traditional car makers come up with competitive vehicles. Whilst Tesla may ride this out fine, it's likely to have an impact on things like margins, going forward.

npo9 7y ago
Is there an electric car that is a true competitor to the Model S?
- xkjkls 7y ago
  The Model S sales are down close to 70% YoY. That’s very obviously not the platform of the future
- rtempaccount1 7y ago
  not sure I've seen a good analogue for the Model S (yet) closest competitor for the Model X at the moment appears to be the Jaguar I-Pace. For the model three there's things like the Hyundai Kona and Renault Zoe which are becoming competitive. I don't think it's there yet, but if I was an investor looking at a 2-3 year timeline, you've got to expect increased competition as there's various models coming along from various companies. Not all of them will be successful, but it's a fair likeliness that some will be.

jeffshek 7y ago

Some slight differences :) Amazon chooses to make little/no profit as a long-term business strategy to reinvest everything. Tesla is forced to make little/no-profit as a short-term business obligation to their suppliers.

IkmoIkmo 7y ago

https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-income https://www.macrotrends.net/stocks/charts/AMZN/amazon/net-in... https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-income https://www.macrotrends.net/stocks/charts/TSLA/tesla/net-inc... Just compare...