4 ms·

"At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my s

"At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?" - Scott McNealy Now, TSLA is only at P/S of 3.8, but that's even more absurd for a car company than 10 is for a computer company. We'll see. So far we have been wrong. The bulls deserve to gloat, but time will tell.

pbreit 7y ago
Ferrari is at 8. Edit: not sure why the downvote. Ferrari has a $32.7b market cap on $3.7b in annual revenue for 8.8x. Tesla has $93b market cap on $24.5b in annual revenue for 3.8x.
- mrnobody_67 7y ago
  It's a fact, but needs context. Specifically, it ignores the fact that Ferrari is profitable ...
throwawayhhakdl 7y ago
That’s a pretty stupid quote. I mean, yes, context matters, and there are cases where things are overvalued (obviously), but the reason prices rise is because revenue (profit) is expected to grow. All of those “basic” assumptions seem to assume that there is 0 growth. The arbitrary ten year payback period doesn’t make sense either. It’s like saying a baby can’t possibly get a job, and ignoring the fact that some babies grow up into adults. I’m sure a more clever analogy exists but that’s the best I have on hand.
jsight 7y ago
Honestly, price to sales alone is a joke of a metric for a growing business. Tesla revenue will likely double within the next 24 months (with quarterly trends clearly showing that towards the end of the year). That would put them at 1.9 P/S at that point with more products on the way. P/S only works well when the situation is relatively static.

pbreit 7y ago

Ferrari is at 8. Edit: not sure why the downvote. Ferrari has a $32.7b market cap on $3.7b in annual revenue for 8.8x. Tesla has $93b market cap on $24.5b in annual revenue for 3.8x.

mrnobody_67 7y ago
It's a fact, but needs context. Specifically, it ignores the fact that Ferrari is profitable ...

throwawayhhakdl 7y ago

That’s a pretty stupid quote. I mean, yes, context matters, and there are cases where things are overvalued (obviously), but the reason prices rise is because revenue (profit) is expected to grow. All of those “basic” assumptions seem to assume that there is 0 growth. The arbitrary ten year payback period doesn’t make sense either. It’s like saying a baby can’t possibly get a job, and ignoring the fact that some babies grow up into adults. I’m sure a more clever analogy exists but that’s the best I have on hand.

jsight 7y ago

Honestly, price to sales alone is a joke of a metric for a growing business. Tesla revenue will likely double within the next 24 months (with quarterly trends clearly showing that towards the end of the year). That would put them at 1.9 P/S at that point with more products on the way. P/S only works well when the situation is relatively static.