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It has declining revenues, increasing liabilities, and sell expensive cars in a strange recessive economy. Its stock is being treated like early Facebook. Sure

It has declining revenues, increasing liabilities, and sell expensive cars in a strange recessive economy. Its stock is being treated like early Facebook. Sure it might have some magical future where it dominates auto sales forever, but supporting this valuation is nuts.

sp332 6y ago
They're in a massive growth phase. Look at their revenue compared to this time last year.
- Silhouette 6y ago
  The problem is that, as every investment firm reminds us, past performance is not a guarantee of future returns. This year is not going to look like last year, for just about anyone in business.
CrazyStat 6y ago
Declining revenues? I want some of what you're smoking.
- bhupy 6y ago
  I think it's incorrect to say that their revenues are declining, but in this past year Ford and GM sold 60-70x more cars than Tesla did, each. Tesla would have to monopolize car production on the entire planet to justify their valuation, at least as a car company. If you were to price this company as a combination of auto (Ford/GM) + energy (Chevron) + ridesharing? (Uber/Lyft), then you could maybe justify this valuation in the long run, but Tesla is yet to really prove any real revenue in energy and ridesharing, at scale. The current value is pure hype and expectation, and remains to be seen who ends up being correct in the long run.
  - SEJeff 6y ago
    at least as a car company Is their justification justified if they are treated as more than a car company? Tesla is a car company. Their current products are great. Their upcoming products might be industry changing. The Semi is going to lower the cost of longhaul freight, which has ripple down effects across many industries. The cybertruck is a moonshot granted, but just might hit it big. Allegedly, they have over 500,000 reservations for it which is more than the Model 3 ever had. Tesla is a car company. Plus a static energy provider (powerwall, powerpack, megapack). Plus a solar provider (solar panels + solar tiles) Plus a large refuel / recharge network provider (superchargers) who has a huge lead on literally everyone. Plus a software company. Even if you want to joke about AP not being full self driving. Find a car you can buy right now that does all of the things that a Tesla on autopilot can do (in specific, stop lights / signs, smart summon, and navigate on autopilot). Last I checked, the closest was Mercedes's supercruise, which is very good and still doesn't have 1/2 of the functionality of Tesla. The OTA updates really are game changing. When I purchased my Model 3 in November 2018, it lacked an alarm system (Sentry Mode), dashcam (Tesla Cam), etc. I got this and a ton more functionality, for free via OTA updates. Unlike every other automotive company, I didn't have to wait for their next year's model. This is a radical rethink of the industry. Their current stock price seems a tad low if they're able to execute effectively in all of the markets they're in. So far, it does appear that they are.
    - bhupy 6y ago
      > Tesla is a car company. Their current products are great. Their upcoming products might be industry changing. The Semi is going to lower the cost of longhaul freight, which has ripple down effects across many industries. The cybertruck is a moonshot granted, but just might hit it big. Allegedly, they have over 500,000 reservations for it which is more than the Model 3 ever had. I don't doubt that Tesla is a great car, I plan to buy one myself. The question is whether this justifies that kind of valuation. Cars are a commodity, and for as long as they've existed, there have always been great cars, shitty cars, and everything in between. Re: cybertruck. Ford already has already demonstrated its F-series all electric pickup prototype. I don't doubt that the semi truck market is huge, but again I ask: what specifically does Tesla have that would make it a monopoly here? Seems like another commodity market. > Plus a static energy provider (powerwall, powerpack, megapack). > Plus a solar provider (solar panels + solar tiles) In theory, yes, but in practice they haven't sold much of this at all. Remember, the current revenue growth is on the back of their car revenues. Vast majority of their opex is in car manufacturing and sales. > Plus a large refuel / recharge network provider (superchargers) who has a huge lead on literally everyone. This is a strong point, but I'm not sure that it's really that much of a competitive advantage. While you're right that Tesla has a huge lead on everyone, that's just because the vast majority of consumers still drive ICE cars, and get the energy for that from Chevron/Arco/Shell/BP pumps sprinkled all over the world. The world will gradually shift away from ICE -> electric, but installing electric chargers at gas pumps isn't a huge lift for your Chevrons of the world — they already have the humans, capital, and real estate. > Their current stock price seems a tad low if they're able to execute effectively in all of the markets they're in. So far, it does appear that they are. I don't doubt that Tesla will continue to exist and be hugely successful — I'm even rooting for Elon because he is IMO the most interesting industrialist of all time. It still doesn't necessarily mean that they are worth $200B+. [1] https://www.youtube.com/watch?v=jAlIfWcCJdI https://www.youtube.com/watch?v=jAlIfWcCJdI
  - Retric 6y ago
    Basically, comparing Apple and Samsung based on number of phones sold is a poor metric. The same applies to Tesla and GM. Vertical integration is a huge difference between Tesla and other car companies. GM and Ford outsource a significantly higher percentage of their cars than Tesla. On top of this their an automotive dealer which captures more revenue and by making cars on demand has lower capital costs. Bosch, Denso, Magna, Continental and ZF Friedrichshafen so more than just make auto parts, but still end up as huge players in the automotive industry.
  - nickik 6y ago
    They have not made money as a a ride-sharing company as they have not tried this. The point is that when it comes online, they will have a huge fleet. That means extra profit with very little investing.
    - bhupy 6y ago
      > The point is that when it comes online, they will have a huge fleet. This might be correct in a world with full-self-driving, though as others might point out, we're quite far away from that. Waymo is probably closer to full-self-driving than Tesla is [1]. If you're talking about just raw Tesla car ownership, then ride-sharing operations still requires a human being to be sitting in the driver's seat that expects to be fairly compensated, at which point you have the same supply growth problem that Uber/Lyft have. [1] https://www.youtube.com/watch?v=aaOB-ErYq6Y https://www.youtube.com/watch?v=aaOB-ErYq6Y
    - xkjkls 6y ago
      There’s nothing to indicate that ML learning with only cameras is the best way to achieve FSD features though. And many Tesla autopilot mishaps indicate the opposite.
- alextheparrot 6y ago
  A more productive comment would’ve taken the statement at face value and tried to learn where the disconnect is. I assume that the first sentence, including declining revenues, is in reference to the current state vs expectations. The disconnect may be in what “Declining revenues” was intended to mean, in this case it makes sense if it is against expected revenue instead of the global value.
  - CrazyStat 6y ago
    You're very generous with your assumption.
- xkjkls 6y ago
  In the US they’ve been posting revenue YoY declines

sp332 6y ago

They're in a massive growth phase. Look at their revenue compared to this time last year.

Silhouette 6y ago
The problem is that, as every investment firm reminds us, past performance is not a guarantee of future returns. This year is not going to look like last year, for just about anyone in business.

CrazyStat 6y ago

Declining revenues? I want some of what you're smoking.

bhupy 6y ago
I think it's incorrect to say that their revenues are declining, but in this past year Ford and GM sold 60-70x more cars than Tesla did, each. Tesla would have to monopolize car production on the entire planet to justify their valuation, at least as a car company. If you were to price this company as a combination of auto (Ford/GM) + energy (Chevron) + ridesharing? (Uber/Lyft), then you could maybe justify this valuation in the long run, but Tesla is yet to really prove any real revenue in energy and ridesharing, at scale. The current value is pure hype and expectation, and remains to be seen who ends up being correct in the long run.
- SEJeff 6y ago
  at least as a car company Is their justification justified if they are treated as more than a car company? Tesla is a car company. Their current products are great. Their upcoming products might be industry changing. The Semi is going to lower the cost of longhaul freight, which has ripple down effects across many industries. The cybertruck is a moonshot granted, but just might hit it big. Allegedly, they have over 500,000 reservations for it which is more than the Model 3 ever had. Tesla is a car company. Plus a static energy provider (powerwall, powerpack, megapack). Plus a solar provider (solar panels + solar tiles) Plus a large refuel / recharge network provider (superchargers) who has a huge lead on literally everyone. Plus a software company. Even if you want to joke about AP not being full self driving. Find a car you can buy right now that does all of the things that a Tesla on autopilot can do (in specific, stop lights / signs, smart summon, and navigate on autopilot). Last I checked, the closest was Mercedes's supercruise, which is very good and still doesn't have 1/2 of the functionality of Tesla. The OTA updates really are game changing. When I purchased my Model 3 in November 2018, it lacked an alarm system (Sentry Mode), dashcam (Tesla Cam), etc. I got this and a ton more functionality, for free via OTA updates. Unlike every other automotive company, I didn't have to wait for their next year's model. This is a radical rethink of the industry. Their current stock price seems a tad low if they're able to execute effectively in all of the markets they're in. So far, it does appear that they are.
  - bhupy 6y ago
    > Tesla is a car company. Their current products are great. Their upcoming products might be industry changing. The Semi is going to lower the cost of longhaul freight, which has ripple down effects across many industries. The cybertruck is a moonshot granted, but just might hit it big. Allegedly, they have over 500,000 reservations for it which is more than the Model 3 ever had. I don't doubt that Tesla is a great car, I plan to buy one myself. The question is whether this justifies that kind of valuation. Cars are a commodity, and for as long as they've existed, there have always been great cars, shitty cars, and everything in between. Re: cybertruck. Ford already has already demonstrated its F-series all electric pickup prototype. I don't doubt that the semi truck market is huge, but again I ask: what specifically does Tesla have that would make it a monopoly here? Seems like another commodity market. > Plus a static energy provider (powerwall, powerpack, megapack). > Plus a solar provider (solar panels + solar tiles) In theory, yes, but in practice they haven't sold much of this at all. Remember, the current revenue growth is on the back of their car revenues. Vast majority of their opex is in car manufacturing and sales. > Plus a large refuel / recharge network provider (superchargers) who has a huge lead on literally everyone. This is a strong point, but I'm not sure that it's really that much of a competitive advantage. While you're right that Tesla has a huge lead on everyone, that's just because the vast majority of consumers still drive ICE cars, and get the energy for that from Chevron/Arco/Shell/BP pumps sprinkled all over the world. The world will gradually shift away from ICE -> electric, but installing electric chargers at gas pumps isn't a huge lift for your Chevrons of the world — they already have the humans, capital, and real estate. > Their current stock price seems a tad low if they're able to execute effectively in all of the markets they're in. So far, it does appear that they are. I don't doubt that Tesla will continue to exist and be hugely successful — I'm even rooting for Elon because he is IMO the most interesting industrialist of all time. It still doesn't necessarily mean that they are worth $200B+. [1] https://www.youtube.com/watch?v=jAlIfWcCJdI https://www.youtube.com/watch?v=jAlIfWcCJdI
- Retric 6y ago
  Basically, comparing Apple and Samsung based on number of phones sold is a poor metric. The same applies to Tesla and GM. Vertical integration is a huge difference between Tesla and other car companies. GM and Ford outsource a significantly higher percentage of their cars than Tesla. On top of this their an automotive dealer which captures more revenue and by making cars on demand has lower capital costs. Bosch, Denso, Magna, Continental and ZF Friedrichshafen so more than just make auto parts, but still end up as huge players in the automotive industry.
- nickik 6y ago
  They have not made money as a a ride-sharing company as they have not tried this. The point is that when it comes online, they will have a huge fleet. That means extra profit with very little investing.
  - bhupy 6y ago
    > The point is that when it comes online, they will have a huge fleet. This might be correct in a world with full-self-driving, though as others might point out, we're quite far away from that. Waymo is probably closer to full-self-driving than Tesla is [1]. If you're talking about just raw Tesla car ownership, then ride-sharing operations still requires a human being to be sitting in the driver's seat that expects to be fairly compensated, at which point you have the same supply growth problem that Uber/Lyft have. [1] https://www.youtube.com/watch?v=aaOB-ErYq6Y https://www.youtube.com/watch?v=aaOB-ErYq6Y
  - xkjkls 6y ago
    There’s nothing to indicate that ML learning with only cameras is the best way to achieve FSD features though. And many Tesla autopilot mishaps indicate the opposite.
alextheparrot 6y ago
A more productive comment would’ve taken the statement at face value and tried to learn where the disconnect is. I assume that the first sentence, including declining revenues, is in reference to the current state vs expectations. The disconnect may be in what “Declining revenues” was intended to mean, in this case it makes sense if it is against expected revenue instead of the global value.
- CrazyStat 6y ago
  You're very generous with your assumption.
xkjkls 6y ago
In the US they’ve been posting revenue YoY declines