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Yeah I'm not really sure what people are expecting out of Tesla. I do think the current investors are low information investors who don't understand what stocks

Yeah I'm not really sure what people are expecting out of Tesla. I do think the current investors are low information investors who don't understand what stocks are or how automotive works. I think we are seeing the beginning of hyperinflation.

ericmay 6y ago
I think some of those investors exist for sure, but what do you mean by "understand what stocks are"? I'd venture to say that you'd be hard pressed to apply a definition that doesn't exclude most people. > how automotive works This is the crux of the matter here. Many believe that Tesla is a car company and should be treated as such. Investors (I do own Tesla but not a significant portion of my portfolio) such as myself view it as a growing energy company. The cars are just batteries with wheels. I'm looking at products like Autobidder [1] in assessing potential long-term growth. They can create software, unlike Duke Energy, AEP, Toyota, GM, etc. which means they can do things like deploy algorithms, solar roof panels, power walls, etc. to better allocate energy at better prices. Obviously that's speculation, but that's just what investing is. I would also say I disagree that we are beginning to see hyperinflation. We're actually facing deflationary pressure due to demand for the dollar, but we do see run-ups in stock prices because investors are chasing yield, and without access to alternatives (for many like myself) like venture capital or investing in private companies (SpaceX) there isn't much left to do with your money except buy real estate and rent it out (risky and work) or just invest in equities. I'd also add that although the US has been printing money, most other countries, especially western democracies, have faced serious problems as well and have also been printing money, and that interest on borrowed amounts isn't that much, though we should really be looking at more fiscally responsible behaviors. Good luck with that though. Democrats will spend money on social programs (even when it doesn't make sense) and Republicans will find ways to cut taxes and kick that can down the road too. [1] https://www.tesla.com/support/autobidder https://www.tesla.com/support/autobidder
- ckastner 6y ago
  > This is the crux of the matter here. Many believe that Tesla is a car company and should be treated as such. Investors [...] such as myself view it as a growing energy company. I think it would be fairer to characterize Tesla as a growning energy startup. I can see the potential, but potential has to be realized, and Tesla is not the only startup working with solar and batteries. In any case, the $450bn valuation dwarfs not just every other car maker, but also every other energy company. $450bn is the combined market value of Toyota, VW, and Exxon.
  - ericmay 6y ago
    Sure. To that point I'd say that there are those such as myself that believe that Tesla will realize that potential, versus not realizing that potential. Tesla has the potential to create an actual subscription services that people would pay for. Autopilot is $8,000 right now, but activate it now for 72 hours for $50? Maybe $100? Now you might be eating into airlines as well. No other car company that has tried subscription services has been met with fanfare. Tesla is the only one who can get away with it. Little things like that make me say that it's a trillion dollar company, easily, once they start realizing that potential. But that's investing. We use numbers, our own intuition, and then make decisions! :)
    - ckastner 6y ago
      Fair enough. I'd still argue that the risk/reward is still way off, but as you say, that's an individual assessment.
- rsynnott 6y ago
  > I think some of those investors exist for sure, but what do you mean by "understand what stocks are"? There does seem to be a certain type of investor who believes that the only important thing about a stock is hype, and not whether it, could say, even theoretically ever make enough income to justify its valuation. Of course, this can be true in the short term. > Investors (I do own Tesla but not a significant portion of my portfolio) such as myself view it as a growing energy company. That would surely imply a _lower_ valuation? You wouldn't expect lasting high margins in that business, whereas it is at least _possible_ (if not common) in the auto industry.
  - ericmay 6y ago
    > That would surely imply a _lower_ valuation? You wouldn't expect lasting high margins in that business, whereas it is at least _possible_ (if not common) in the auto industry. I think that's one difference here. I do expect lasting high margins (car sales and services). I mentioned this in another comment, but being able to sell passes for autopilot trips for $100 or something are going to be very lucrative. Think about something like the Tesla supercharger network. Ok now that Tesla is also an energy supplier and uses software to find good rates, stores energy in batteries, etc, they'll better be able to get the best price on energy. You can sell excess energy back into the grid via Tesla software with your solar roof, for example, or charge your Tesla even cheaper than competitors might using a traditional energy grid. These are just possibilities, but I see the end result being an extremely profitable business with great margins. My only area of concern right now is that their auto service is abysmal. They charge a premium price for a car, but boy it's nowhere near the service you get with Mercedes or BMW. Lots of "well that's in-spec" types of comments from service teams. Lack of loaner cars at times, just all around not great service (though there are exceptions) that I've seen first-hand and anecdotally. Even the r/Tesla subreddit will tell you it's bad.
    - rsynnott 6y ago
      > Ok now that Tesla is also an energy supplier and uses software to find good rates, stores energy in batteries, etc, they'll better be able to get the best price on energy. You can sell excess energy back into the grid via Tesla software with your solar roof, for example Okay, so assuming the grid will support this, one would expect other energy companies to buy solar power, from any domestic solar panels (this already happens in some markets). So why would one buy Tesla panels, which were tied to one buyer, who could use that tie-in to get lower prices (if that were legal; electricity markets are heavily regulated in most countries and I suspect this sort of tie-in would ultimately not be legal). I can see two scenarios here (assuming a developed grid allowing this sort of feed-in). (a) Tesla panel owners can sell to any energy company, like anyone else. Tesla can thus sell their panels for the same as anyone else (ie, pretty low margins),but they have no advantage as an energy purchaser. (b) Tesla panels are tied to Tesla as an energy purchaser, whereas generic panel owners can sell to anyone. Tesla gets cheaper power, but their panels are now an inferior product and they must sell them at negative margins to get them on roofs. Any cleverness about domestic grid pricing will likely have to be enabled by national grid controllers, and accessible to all energy companies. While I do think it will come, I would doubt that there's room for anyone to have a monopoly in most markets, and I think it may actually be a hard sell to consumers, because traditionally consumers _hate_ variable pricing, even if it's ultimately to their benefit, for psychological reasons. RE the supercharger network, I suspect that this is at best a short-term advantage. It's already a tiny part of the high-speed charger infrastructure in many countries. It probably is a clear advantage for now in the US, but that shouldn't be expected to be a long-lasting situation.
nickik 6y ago
> stocks are or how automotive works Because the people who 'understand how automotive works' have done such a fantastic job in the last 10 years. We should clearly listen to these people. Get your investment advice from Bob Lutz. And btw, just because you have different opinion, calling everybody else essentially 'stupid' is not really a great argument.

ericmay 6y ago

I think some of those investors exist for sure, but what do you mean by "understand what stocks are"? I'd venture to say that you'd be hard pressed to apply a definition that doesn't exclude most people. > how automotive works This is the crux of the matter here. Many believe that Tesla is a car company and should be treated as such. Investors (I do own Tesla but not a significant portion of my portfolio) such as myself view it as a growing energy company. The cars are just batteries with wheels. I'm looking at products like Autobidder [1] in assessing potential long-term growth. They can create software, unlike Duke Energy, AEP, Toyota, GM, etc. which means they can do things like deploy algorithms, solar roof panels, power walls, etc. to better allocate energy at better prices. Obviously that's speculation, but that's just what investing is. I would also say I disagree that we are beginning to see hyperinflation. We're actually facing deflationary pressure due to demand for the dollar, but we do see run-ups in stock prices because investors are chasing yield, and without access to alternatives (for many like myself) like venture capital or investing in private companies (SpaceX) there isn't much left to do with your money except buy real estate and rent it out (risky and work) or just invest in equities. I'd also add that although the US has been printing money, most other countries, especially western democracies, have faced serious problems as well and have also been printing money, and that interest on borrowed amounts isn't that much, though we should really be looking at more fiscally responsible behaviors. Good luck with that though. Democrats will spend money on social programs (even when it doesn't make sense) and Republicans will find ways to cut taxes and kick that can down the road too. [1] https://www.tesla.com/support/autobidder https://www.tesla.com/support/autobidder

ckastner 6y ago
> This is the crux of the matter here. Many believe that Tesla is a car company and should be treated as such. Investors [...] such as myself view it as a growing energy company. I think it would be fairer to characterize Tesla as a growning energy startup. I can see the potential, but potential has to be realized, and Tesla is not the only startup working with solar and batteries. In any case, the $450bn valuation dwarfs not just every other car maker, but also every other energy company. $450bn is the combined market value of Toyota, VW, and Exxon.
- ericmay 6y ago
  Sure. To that point I'd say that there are those such as myself that believe that Tesla will realize that potential, versus not realizing that potential. Tesla has the potential to create an actual subscription services that people would pay for. Autopilot is $8,000 right now, but activate it now for 72 hours for $50? Maybe $100? Now you might be eating into airlines as well. No other car company that has tried subscription services has been met with fanfare. Tesla is the only one who can get away with it. Little things like that make me say that it's a trillion dollar company, easily, once they start realizing that potential. But that's investing. We use numbers, our own intuition, and then make decisions! :)
  - ckastner 6y ago
    Fair enough. I'd still argue that the risk/reward is still way off, but as you say, that's an individual assessment.
rsynnott 6y ago
> I think some of those investors exist for sure, but what do you mean by "understand what stocks are"? There does seem to be a certain type of investor who believes that the only important thing about a stock is hype, and not whether it, could say, even theoretically ever make enough income to justify its valuation. Of course, this can be true in the short term. > Investors (I do own Tesla but not a significant portion of my portfolio) such as myself view it as a growing energy company. That would surely imply a _lower_ valuation? You wouldn't expect lasting high margins in that business, whereas it is at least _possible_ (if not common) in the auto industry.
- ericmay 6y ago
  > That would surely imply a _lower_ valuation? You wouldn't expect lasting high margins in that business, whereas it is at least _possible_ (if not common) in the auto industry. I think that's one difference here. I do expect lasting high margins (car sales and services). I mentioned this in another comment, but being able to sell passes for autopilot trips for $100 or something are going to be very lucrative. Think about something like the Tesla supercharger network. Ok now that Tesla is also an energy supplier and uses software to find good rates, stores energy in batteries, etc, they'll better be able to get the best price on energy. You can sell excess energy back into the grid via Tesla software with your solar roof, for example, or charge your Tesla even cheaper than competitors might using a traditional energy grid. These are just possibilities, but I see the end result being an extremely profitable business with great margins. My only area of concern right now is that their auto service is abysmal. They charge a premium price for a car, but boy it's nowhere near the service you get with Mercedes or BMW. Lots of "well that's in-spec" types of comments from service teams. Lack of loaner cars at times, just all around not great service (though there are exceptions) that I've seen first-hand and anecdotally. Even the r/Tesla subreddit will tell you it's bad.
  - rsynnott 6y ago
    > Ok now that Tesla is also an energy supplier and uses software to find good rates, stores energy in batteries, etc, they'll better be able to get the best price on energy. You can sell excess energy back into the grid via Tesla software with your solar roof, for example Okay, so assuming the grid will support this, one would expect other energy companies to buy solar power, from any domestic solar panels (this already happens in some markets). So why would one buy Tesla panels, which were tied to one buyer, who could use that tie-in to get lower prices (if that were legal; electricity markets are heavily regulated in most countries and I suspect this sort of tie-in would ultimately not be legal). I can see two scenarios here (assuming a developed grid allowing this sort of feed-in). (a) Tesla panel owners can sell to any energy company, like anyone else. Tesla can thus sell their panels for the same as anyone else (ie, pretty low margins),but they have no advantage as an energy purchaser. (b) Tesla panels are tied to Tesla as an energy purchaser, whereas generic panel owners can sell to anyone. Tesla gets cheaper power, but their panels are now an inferior product and they must sell them at negative margins to get them on roofs. Any cleverness about domestic grid pricing will likely have to be enabled by national grid controllers, and accessible to all energy companies. While I do think it will come, I would doubt that there's room for anyone to have a monopoly in most markets, and I think it may actually be a hard sell to consumers, because traditionally consumers _hate_ variable pricing, even if it's ultimately to their benefit, for psychological reasons. RE the supercharger network, I suspect that this is at best a short-term advantage. It's already a tiny part of the high-speed charger infrastructure in many countries. It probably is a clear advantage for now in the US, but that shouldn't be expected to be a long-lasting situation.

nickik 6y ago

> stocks are or how automotive works Because the people who 'understand how automotive works' have done such a fantastic job in the last 10 years. We should clearly listen to these people. Get your investment advice from Bob Lutz. And btw, just because you have different opinion, calling everybody else essentially 'stupid' is not really a great argument.