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With a market cap of 50T the stock would return 2% dividend eventually. And banks can currently get loans from the US government and other funds for around 0.0

With a market cap of 50T the stock would return 2% dividend eventually. And banks can currently get loans from the US government and other funds for around 0.03%. So if you were a banker and you got a loan for 50T from the US government as long as interest rates remained low for the next 21 years you would have a company making 20B in profit and a cost of 15B servicing the debt. And the next year it would be 40B in profit and 15B costs. So the question you are asking is what are rates going to be for servicing debt over the next 20 years? If rates go up to 8% 50T is probably too high for the stock. The reason TSLA's stock is so low currently is because there is no guarantee that it will continue to grow at the same rate over the next 15 years.

mewpmewp2 6y ago
So then it becomes about understanding risk. Let's say we are able to determine that there is 10 percent chance that this company will succeed or 90 percent that it will fail completely, how would you then value the company right now? I guess my point here is to figure out how companies should be valued. I think to accurately value something you will need to estimate different most likely timelines and endings for a company and come back from there. I feel like anyone who does a blanket claim of TSLA or any other stock being overvalued has not done such calculations. Also I am not claiming Tesla is not overvalued, but just that you can't be this sure without doing those calculations. I am finding it so hard to find someone to have this discussion with.
- bob33212 6y ago
  Yes, you're right. It is about risk. There are hundreds of things that could go wrong on Tesla's path to converting the world to Autonomous EV transportation. No one knows which if any of those things will go wrong over the next 5-10 years. I'm not a day trader, so for me, saying that Tesla is overvalued today is like saying that people who buy flood insurance are stupid because there is no rain the 10 day forecast. If TSLA was $100k/share today then yes it would be overvalued. Just like if someone was paying $100k/month for flood insurance on a 200k house in the desert that would be stupid. For my analysis Tesla has a decent chance at building a 25k profitable EV and 5-6 other models at scale and succeeding in Autonomy within 5 years. So I'm comfortable buying today at anything below $1200.
  - mewpmewp2 6y ago
    Funny you mention insurance. One way to think about buying tech stocks right now is to insure yourself against new "industrial revolution" type of thing, but more like "tech/ai revolution". I feel like I need to have at least something allocated in all of the tech companies that might be part of that revolution. Eventually unless governments are able to stop it, it seems like larger companies might grow even larger compared to others and it will be a very complex challenge to stop that monopolization. If Tesla success will be sure to happen it will be too late by then. It seems like FOMO and it is, but I think it is very reasonable. I don't invest in Tesla because I hope to double or triple short term, I just want to be part of what might very reasonably happen.

mewpmewp2 6y ago

So then it becomes about understanding risk. Let's say we are able to determine that there is 10 percent chance that this company will succeed or 90 percent that it will fail completely, how would you then value the company right now? I guess my point here is to figure out how companies should be valued. I think to accurately value something you will need to estimate different most likely timelines and endings for a company and come back from there. I feel like anyone who does a blanket claim of TSLA or any other stock being overvalued has not done such calculations. Also I am not claiming Tesla is not overvalued, but just that you can't be this sure without doing those calculations. I am finding it so hard to find someone to have this discussion with.

bob33212 6y ago
Yes, you're right. It is about risk. There are hundreds of things that could go wrong on Tesla's path to converting the world to Autonomous EV transportation. No one knows which if any of those things will go wrong over the next 5-10 years. I'm not a day trader, so for me, saying that Tesla is overvalued today is like saying that people who buy flood insurance are stupid because there is no rain the 10 day forecast. If TSLA was $100k/share today then yes it would be overvalued. Just like if someone was paying $100k/month for flood insurance on a 200k house in the desert that would be stupid. For my analysis Tesla has a decent chance at building a 25k profitable EV and 5-6 other models at scale and succeeding in Autonomy within 5 years. So I'm comfortable buying today at anything below $1200.
- mewpmewp2 6y ago
  Funny you mention insurance. One way to think about buying tech stocks right now is to insure yourself against new "industrial revolution" type of thing, but more like "tech/ai revolution". I feel like I need to have at least something allocated in all of the tech companies that might be part of that revolution. Eventually unless governments are able to stop it, it seems like larger companies might grow even larger compared to others and it will be a very complex challenge to stop that monopolization. If Tesla success will be sure to happen it will be too late by then. It seems like FOMO and it is, but I think it is very reasonable. I don't invest in Tesla because I hope to double or triple short term, I just want to be part of what might very reasonably happen.