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Tesla's competition wanted to make sure that their margins don't decrease, as most of their stock holders are chasing dividends. Dividends made sense in the 20t

Tesla's competition wanted to make sure that their margins don't decrease, as most of their stock holders are chasing dividends. Dividends made sense in the 20th century (and those companies had better performance), but since 1990-2000 companies that reinvested all their money into R&D and gave back 0 dividends had better returns even disregarding the tax advantages.

MetalGuru 6y ago
Is this the whole shift from value to growth stocks? See it ever tipping back the other direction again?
- deleted 6y ago
  [deleted]
- xiphias2 6y ago
  Sure. I don’t. The world is getting faster all the time.
zarkov99 6y ago
This has always puzzled me. As a stockholder what is the use of a stock that never pays dividends? What does ownership of a bussiness mean when you have no share of its profits?
- samatman 6y ago
  The dirty secret is that stock holding has slowly shifted to be the safer hedge against inflation, which has been creeping upward in the classic tradition of frog boiling. Government bonds are safer still, but on the right time horizon index funds have had better rates of return. Point is, you have to park your savings somewhere, because if you leave them in the bank, the paltry returns of a savings account won't maintain purchasing power relatively to inflationary devaluation.
  - zarkov99 6y ago
    right, I understand that, and I accept that currently cash is trash and bonds are little better. But it is very unsettling to think that there is so little tethering non-dividend paying stocks to any sort of value.
- xiphias2 6y ago
  Wouldn't you want to own a company that doesn't pay profits for 20 years, but gives you $10B every year after those 20 years? Discounted cash flow (https://en.wikipedia.org/wiki/Discounted_cash_flow https://en.wikipedia.org/wiki/Discounted_cash_flow) is being used to value companies for this reason.
  - itsoktocry 6y ago
    >Wouldn't you want to own a company that doesn't pay profits for 20 years, but gives you $10B every year after those 20 years? That's an expected dividend. What is the DCF available to shareholders of a company that never pays a dividend? Nothing.
  - zarkov99 6y ago
    When has that ever happened to lowly stock holders?
itsoktocry 6y ago
>but since 1990-2000 companies that reinvested all their money into R&D and gave back 0 dividends Did you know you can see exactly how much companies are spending on R&D and reinvesting in the company in a company's financial statements? Did you know that Tesla invests a relatively small amount in R&D, and that the number has been stagnant for years? They barely spend enough to cover maintenance on their current facilities. Have you compares this to other auto companies? Where do people get this idea that Tesla generates massive cash that it reinvests back into the company (a la Amazon)?

MetalGuru 6y ago

Is this the whole shift from value to growth stocks? See it ever tipping back the other direction again?

deleted 6y ago
[deleted]
xiphias2 6y ago
Sure. I don’t. The world is getting faster all the time.

zarkov99 6y ago

This has always puzzled me. As a stockholder what is the use of a stock that never pays dividends? What does ownership of a bussiness mean when you have no share of its profits?

samatman 6y ago
The dirty secret is that stock holding has slowly shifted to be the safer hedge against inflation, which has been creeping upward in the classic tradition of frog boiling. Government bonds are safer still, but on the right time horizon index funds have had better rates of return. Point is, you have to park your savings somewhere, because if you leave them in the bank, the paltry returns of a savings account won't maintain purchasing power relatively to inflationary devaluation.
- zarkov99 6y ago
  right, I understand that, and I accept that currently cash is trash and bonds are little better. But it is very unsettling to think that there is so little tethering non-dividend paying stocks to any sort of value.
xiphias2 6y ago
Wouldn't you want to own a company that doesn't pay profits for 20 years, but gives you $10B every year after those 20 years? Discounted cash flow (https://en.wikipedia.org/wiki/Discounted_cash_flow https://en.wikipedia.org/wiki/Discounted_cash_flow) is being used to value companies for this reason.
- itsoktocry 6y ago
  >Wouldn't you want to own a company that doesn't pay profits for 20 years, but gives you $10B every year after those 20 years? That's an expected dividend. What is the DCF available to shareholders of a company that never pays a dividend? Nothing.
- zarkov99 6y ago
  When has that ever happened to lowly stock holders?

itsoktocry 6y ago

>but since 1990-2000 companies that reinvested all their money into R&D and gave back 0 dividends Did you know you can see exactly how much companies are spending on R&D and reinvesting in the company in a company's financial statements? Did you know that Tesla invests a relatively small amount in R&D, and that the number has been stagnant for years? They barely spend enough to cover maintenance on their current facilities. Have you compares this to other auto companies? Where do people get this idea that Tesla generates massive cash that it reinvests back into the company (a la Amazon)?