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Revenues down Year over Year, and yet their stock price is 8x. Profiability increased, but its market cap is larger than Toyota which has over 10x the revenues.

Revenues down Year over Year, and yet their stock price is 8x. Profiability increased, but its market cap is larger than Toyota which has over 10x the revenues. This stock is truly one for /r/wallstreetbets.

danhak 6y ago
You realize their factory was shut down for much of this period, right? Comparing YOY quarterly figures here is very disingenuous.
- reducesuffering 6y ago
  Only 2 months out of the year
  - danhak 6y ago
    About half of the quarter under discussion.
- jennyyang 6y ago
  Their stock price rose 8x. There's nothing in these numbers that justifies this type of meteoric rise exception pure, unadulterated speculation. They wouldn't have even been profitable if they couldn't sell their regulatory credits. How is that justifiable for an 8x YoY increase?
  - sacred_numbers 6y ago
    The potential upside for Tesla is huge. If they can become the Apple of electric cars and if electric cars become standard, they could be worth trillions. The reason their valuation was not in the trillions is because there is a risk that they will go bankrupt, that other companies will take the lead in EVs, or that EVs will not be where the market is headed in the foreseeable future. The reason for the jump in valuation is that those risks are being steadily reduced. EV competition is scarce, Tesla's cash reserves and consistent free cash flow hugely reduce the risk of bankruptcy, and the market is continuing to demonstrate that it wants electric cars (at least Tesla electric cars, that is), even during a pandemic. There is certainly an element of speculation and retail investor FOMO, but if Tesla's institutional investors didn't think this valuation could be justified at all they probably would have sold by now. Time will tell how reasonable the valuation really is, but betting against Tesla has not worked out very well so far.
    - JoeSmithson 6y ago
      > "they could be worth trillions" Trillions? 50x the size of Ford? Bigger than, essentially, the current combined value of every car company in the world at the moment? How?
      - zaroth 6y ago
        Ford has $150 billion in debt. 50x the size of Ford would be an enterprise value of $7.5 trillion, even if Ford's share price was $0.
    - yoavm 6y ago
      But why would they become the Apple of electric cars? Why do you think they have better chances than anyone else? The market, to me, seems to show that most people still buy non-electric cars. Once that flips, any other much bigger car manufacturer could start producing more electric cars. There doesn't seem to be any rocket science to it. Back in the 90s I bought a Rio PMP300. Before anyone knew what MP3s were, it was the first mp3 player out there. That didn't help them when people did care about mp3 players - bigger players just came and ate the cake. I'm not sure what makes Tesla a different story. Seems like it was supposed to be "Autopilot", but we all know how good that's going.
      - stingrae 6y ago
        I do think Tesla is way over valued at the moment. How could they be worth more than the market cap of all the vehicle companies combined? There isn’t going to be largely more numbers of vehicles bought each year. As to why Tesla could be the winner? One reason is that all the other automakers are failing to produce mass market EVs that anyone wants to buy.
        ckdarby 6y ago
        My wife & I are considering our next vehicle our last non-electric one. We consider every vehicle brand a joke aside from Tesla.
  - ProAm 6y ago
    stock price is always speculation, it just depends if its short term or long term.
  - marvin 6y ago
    Before that 8X rise, though, stock price was basically unchanged since 2014. While revenue in that period has grown 10X. So you could make a reasonable argument that the huge stock price appreciation in the last 12 months was in fact a re-pricing to reflect that the stock market now believes Tesla has a decent shot at becoming one of the world's leading tech companies. It doesn't reflect that something magical has happened in the last two years; something good has happened in the last 6 years and the stock market at large has only recently realized this.
- duncanawoods 6y ago
  They now have two factories...
  - xoxoy 6y ago
    and yet their costs never went up after adding a second factory
- FireBeyond 6y ago
  And yet their stock price went up 8x, with factories shut down. That's not a valid question, though?
grecy 6y ago
(I've posted this before, it's worth repeating) I think the current TSLA situation is simply about betting on the future, and it's easy to see why they're so much higher than Toyota. The stock price of a company not only represents what it's doing right now (sales, profits, whatever) but also a prediction of what it might do into the future. Tesla are doing OK now, (kind of) breaking even, and making a decent number of cars. I think most would agree they're more solid now than ever before, and it seems like they're probably here to stay. But much more importantly we have to look at what they could be doing in 5-10 or 20 years. Often people say Tesla isn't anything near the behemoth that is Toyota (true), and their stock shouldn't be higher than Toyota's. Toyota now make just under 9 million cars per year worldwide [1], exactly the same as they made in 2007. In 2007 their share price was ~$75USD and now it's roughly similar. While they make a ton of cars and are profitable, they're not growing or really doing anything drastically different to almost 15 years ago. It's very likely in 10 or 15 more years they'll still be trundling along, doing the same things, making a similar number of cars. That's solid and good, and their stock price reflects that. Tesla, on the other hand, are going all out for expansion. With the new factory going up in Germany, and one about to be announced in the USA for Cybertruck, it seems like they have no intention of slowing down, and plan to continue to grow extremely rapidly. In 10 years they may be making as many cars as Toyota is now. In 20 years they might be twice the size of Toyota (in terms of units produced). Whether you believe they can pull that off or not is a matter of speculation that isn't worth getting into. That "guess the future" is exactly what we're seeing in the stock price. Toyota's stock price is not skyrocking because they're not doing anything radical, and aren't growing exponentially. On the other hand Tesla's stock price is skyrocketing, which we can read to mean a huge number of investors think they can pull off massive growth. Of course time will tell, and in the mean time we can all gamble on what we think will happen. (Note - I haven't even touched on Tesla's plans for self-driving, their "revolutionary" new battery chemistry, home storage, large scale storage or whatever else they're (maybe) cooking up. Also important is the inevitable extinction of the internal combustion engine. Those are heated topics of disagreement, but again, the fact the stoke price is climbing so fast shows people think Tesla have a very bright future) [1] https://www.statista.com/statistics/267272/worldwide-vehicle-production-of-toyota/ https://www.statista.com/statistics/267272/worldwide-vehicle...
- 6y ago

danhak 6y ago

You realize their factory was shut down for much of this period, right? Comparing YOY quarterly figures here is very disingenuous.

reducesuffering 6y ago
Only 2 months out of the year
- danhak 6y ago
  About half of the quarter under discussion.
jennyyang 6y ago
Their stock price rose 8x. There's nothing in these numbers that justifies this type of meteoric rise exception pure, unadulterated speculation. They wouldn't have even been profitable if they couldn't sell their regulatory credits. How is that justifiable for an 8x YoY increase?
- sacred_numbers 6y ago
  The potential upside for Tesla is huge. If they can become the Apple of electric cars and if electric cars become standard, they could be worth trillions. The reason their valuation was not in the trillions is because there is a risk that they will go bankrupt, that other companies will take the lead in EVs, or that EVs will not be where the market is headed in the foreseeable future. The reason for the jump in valuation is that those risks are being steadily reduced. EV competition is scarce, Tesla's cash reserves and consistent free cash flow hugely reduce the risk of bankruptcy, and the market is continuing to demonstrate that it wants electric cars (at least Tesla electric cars, that is), even during a pandemic. There is certainly an element of speculation and retail investor FOMO, but if Tesla's institutional investors didn't think this valuation could be justified at all they probably would have sold by now. Time will tell how reasonable the valuation really is, but betting against Tesla has not worked out very well so far.
  - JoeSmithson 6y ago
    > "they could be worth trillions" Trillions? 50x the size of Ford? Bigger than, essentially, the current combined value of every car company in the world at the moment? How?
    - zaroth 6y ago
      Ford has $150 billion in debt. 50x the size of Ford would be an enterprise value of $7.5 trillion, even if Ford's share price was $0.
  - yoavm 6y ago
    But why would they become the Apple of electric cars? Why do you think they have better chances than anyone else? The market, to me, seems to show that most people still buy non-electric cars. Once that flips, any other much bigger car manufacturer could start producing more electric cars. There doesn't seem to be any rocket science to it. Back in the 90s I bought a Rio PMP300. Before anyone knew what MP3s were, it was the first mp3 player out there. That didn't help them when people did care about mp3 players - bigger players just came and ate the cake. I'm not sure what makes Tesla a different story. Seems like it was supposed to be "Autopilot", but we all know how good that's going.
    - stingrae 6y ago
      I do think Tesla is way over valued at the moment. How could they be worth more than the market cap of all the vehicle companies combined? There isn’t going to be largely more numbers of vehicles bought each year. As to why Tesla could be the winner? One reason is that all the other automakers are failing to produce mass market EVs that anyone wants to buy.
      - ckdarby 6y ago
        My wife & I are considering our next vehicle our last non-electric one. We consider every vehicle brand a joke aside from Tesla.
- ProAm 6y ago
  stock price is always speculation, it just depends if its short term or long term.
- marvin 6y ago
  Before that 8X rise, though, stock price was basically unchanged since 2014. While revenue in that period has grown 10X. So you could make a reasonable argument that the huge stock price appreciation in the last 12 months was in fact a re-pricing to reflect that the stock market now believes Tesla has a decent shot at becoming one of the world's leading tech companies. It doesn't reflect that something magical has happened in the last two years; something good has happened in the last 6 years and the stock market at large has only recently realized this.
duncanawoods 6y ago
They now have two factories...
- xoxoy 6y ago
  and yet their costs never went up after adding a second factory
FireBeyond 6y ago
And yet their stock price went up 8x, with factories shut down. That's not a valid question, though?

grecy 6y ago

(I've posted this before, it's worth repeating) I think the current TSLA situation is simply about betting on the future, and it's easy to see why they're so much higher than Toyota. The stock price of a company not only represents what it's doing right now (sales, profits, whatever) but also a prediction of what it might do into the future. Tesla are doing OK now, (kind of) breaking even, and making a decent number of cars. I think most would agree they're more solid now than ever before, and it seems like they're probably here to stay. But much more importantly we have to look at what they could be doing in 5-10 or 20 years. Often people say Tesla isn't anything near the behemoth that is Toyota (true), and their stock shouldn't be higher than Toyota's. Toyota now make just under 9 million cars per year worldwide [1], exactly the same as they made in 2007. In 2007 their share price was ~$75USD and now it's roughly similar. While they make a ton of cars and are profitable, they're not growing or really doing anything drastically different to almost 15 years ago. It's very likely in 10 or 15 more years they'll still be trundling along, doing the same things, making a similar number of cars. That's solid and good, and their stock price reflects that. Tesla, on the other hand, are going all out for expansion. With the new factory going up in Germany, and one about to be announced in the USA for Cybertruck, it seems like they have no intention of slowing down, and plan to continue to grow extremely rapidly. In 10 years they may be making as many cars as Toyota is now. In 20 years they might be twice the size of Toyota (in terms of units produced). Whether you believe they can pull that off or not is a matter of speculation that isn't worth getting into. That "guess the future" is exactly what we're seeing in the stock price. Toyota's stock price is not skyrocking because they're not doing anything radical, and aren't growing exponentially. On the other hand Tesla's stock price is skyrocketing, which we can read to mean a huge number of investors think they can pull off massive growth. Of course time will tell, and in the mean time we can all gamble on what we think will happen. (Note - I haven't even touched on Tesla's plans for self-driving, their "revolutionary" new battery chemistry, home storage, large scale storage or whatever else they're (maybe) cooking up. Also important is the inevitable extinction of the internal combustion engine. Those are heated topics of disagreement, but again, the fact the stoke price is climbing so fast shows people think Tesla have a very bright future) [1] https://www.statista.com/statistics/267272/worldwide-vehicle-production-of-toyota/ https://www.statista.com/statistics/267272/worldwide-vehicle...

6y ago