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> Think of Tesla as maximizing the expected value of its entire profitability over its lifetime. I'm familiar with the discounted cash flow model of valuing a
by adwn 7y ago
> Think of Tesla as maximizing the expected value of its entire profitability over its lifetime.
I'm familiar with the discounted cash flow model of valuing a company. You're missing the point: If they keep losing money, they need more investments. At some point, they won't get any more investments, because potential investors won't believe that the company will be profitable in the future.
> [...] it has a good chance of making a lot more money by continuing to invest in itself.
Only if they don't go bankrupt in the near future, which is a very real possibility. Then all this talk about growth and "investing in itself" will be useless – they will make zero money.
- beat 7y agoWhich happens to a lot of companies. Big deal. You invest in a growth company, you are expected to recognize the risk involved in that investment. At the moment, Tesla seems to have no real trouble raising the kind of capital they need in order to maintain the level of growth they're experiencing. But it's going to take a lot more growth before they're on par with GM or Toyota or the like. And since that's the obvious goal, it's foolish to be "profitable".
- 1123581321 7y agoI do not understand why you are sneering at the idea of re-investing profits then. Same for why the availability and cost of money (equity or debt) would not be something also forecast and planned for by Tesla.