5 ms·

Probably about 95% based on fundamentals.

doopy-loopy2 6y ago
haha
bumby 6y ago
I know you may have meant that tongue-in-cheek, but do you think they should fundamentally be valued as a traditional manufacturer or as a tech stock?
- sroussey 6y ago
  Why tongue-in-cheek?
  - bumby 6y ago
    Maybe it wasn’t meant that way, but it can certainly be read if one considers the “95%” as an exaggeration. That’s why I was trying to clarify if it was meant to be out of line with “cyclical manufacturing” or with “tech”
    - sroussey 6y ago
      The idea that Tesla should have a “tech” multiple, which generally means 80% margins and high growth rates, is kinda scary, since they don’t have either. 80-95% drop would be reasonable if and when it loses its “story”. But it can use its valuation to bring in capital to try and make the business into something else.
- kingnothing 6y ago
  Tech companies can build something one time and sell it a million times. Tesla builds one car, one powerwall, one roof, and sells it one time. It is more akin to a manufacturer than a tech stock.
  - bumby 6y ago
    That’s a good distinction. Would that also imply APPL is not a traditional tech stock but more of a tech/consumer hardware stock? I haven’t looked yet but I’d be Cypriots how their valuation compares in that light
    - kingnothing 6y ago
      Apple is an interesting one. They definitely have a consumer hardware division, but there's also the app store where they take a big cut of everything sold through it. Other than reviewing apps, they built it once and get to reap profits off of it indefinitely. Same for music, tv, iCloud backups, etc.
- rsynnott 6y ago
  Traditional manufacturer. Saying "we're a tech company over and over" isn't going to make the global ASP for cars double, and they would ultimately need both that, and grabbing an unrealistically large part of the market, to justify their current price. (The solar business is even worse; that's basically a generic product and should be expected to have extremely low margins in the long term)
sroussey 6y ago
I remember Cisco, Qualcomm, and Amazon falling 80-90% last tech crash.

haha

I know you may have meant that tongue-in-cheek, but do you think they should fundamentally be valued as a traditional manufacturer or as a tech stock?

sroussey 6y ago
Why tongue-in-cheek?
- bumby 6y ago
  Maybe it wasn’t meant that way, but it can certainly be read if one considers the “95%” as an exaggeration. That’s why I was trying to clarify if it was meant to be out of line with “cyclical manufacturing” or with “tech”
  - sroussey 6y ago
    The idea that Tesla should have a “tech” multiple, which generally means 80% margins and high growth rates, is kinda scary, since they don’t have either. 80-95% drop would be reasonable if and when it loses its “story”. But it can use its valuation to bring in capital to try and make the business into something else.
kingnothing 6y ago
Tech companies can build something one time and sell it a million times. Tesla builds one car, one powerwall, one roof, and sells it one time. It is more akin to a manufacturer than a tech stock.
- bumby 6y ago
  That’s a good distinction. Would that also imply APPL is not a traditional tech stock but more of a tech/consumer hardware stock? I haven’t looked yet but I’d be Cypriots how their valuation compares in that light
  - kingnothing 6y ago
    Apple is an interesting one. They definitely have a consumer hardware division, but there's also the app store where they take a big cut of everything sold through it. Other than reviewing apps, they built it once and get to reap profits off of it indefinitely. Same for music, tv, iCloud backups, etc.
rsynnott 6y ago
Traditional manufacturer. Saying "we're a tech company over and over" isn't going to make the global ASP for cars double, and they would ultimately need both that, and grabbing an unrealistically large part of the market, to justify their current price. (The solar business is even worse; that's basically a generic product and should be expected to have extremely low margins in the long term)

sroussey 6y ago

I remember Cisco, Qualcomm, and Amazon falling 80-90% last tech crash.