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I haven’t ever seen any rationalization _in numbers_ for why TSLA has the market cap it does. All justifications use abstract phrasing like “they’re in the gree

I haven’t ever seen any rationalization _in numbers_ for why TSLA has the market cap it does. All justifications use abstract phrasing like “they’re in the green market” and “Tesla has core differences”. That doesn’t explain anything, in fact, it makes me more pessimistic than before. What are Tesla’s actual advantages that make it worth more than all of the other car manufacturers combined?

ProjectArcturis 6y ago
I don't own any TSLA, but the bull case would be that they have a 1000-mile head start on their competition, and a unique culture that allows them to be far nimbler than the GMs of the world. In 20 years, when we drive only electric cars, TSLA will be the near-monopolist of that market, similar to Google, Amazon, or Facebook. I don't think I really believe that case, but that's the way the valuation is justified. It's not something that can be captured easily in a discounted cash flow model, because after a couple years you're basically just inventing numbers there. But if you knew for sure that TSLA would succeed in dominating the electric car market, you'd probably buy it at much higher prices than we see today.
- remote_phone 6y ago
  Tesla has already lost market share in Europe and North America. There are many smaller and cheaper alternatives and that’s what people are buying.
  - Closi 6y ago
    I looked at this earlier in the year, and my personal view at the time was that actually other electric cars were a bit cheaper but you get a lot less car. The price difference just isn’t that big in relative terms (the starting prices are all relatively high), but the difference in what you get is huge. And I think that’s part of the allure of Tesla - can a 2010-era-supercar be built for $25k? What about less? I ended up getting a 2nd hand diesel BMW because I got the feeling that the market would move a lot in the next 5 years.
- itsoktocry 6y ago
  >they have a 1000-mile head start on their competition This is just more abstract phrasing. They make good, albeit expensive, cars that their fan-base seems happy with. They lead in a few things(tech, batteries) and are behind in others (maybe self-driving, definitely quality). Where is the 1000-mile lead?
  - howlgarnish 6y ago
    Many people would have said the same about Apple vs Nokia when the first iPhone came out.
    - itsoktocry 6y ago
      >Many people would have said the same about Apple vs Nokia when the first iPhone came out. So Tesla is Nokia in this analogy? I agree, their 1000-mile lead can disappear.
- wasdfff 6y ago
  The 1000 mile lead ended the day they sold their first car and revealed any and all novel things about their tech to the world.
  - peteradio 6y ago
    Yes! You can purchase the talent that produced the success at the very worst case. In the best case you can reverse engineer with much less talent.
sixQuarks 6y ago
Don't let the laid-back nature of this video fool you, this guy has been spot on with TSLA going back at least 2 years. Helped me ride out a 20x return on the stock. He provides a rational way to value TSLA at these levels. Nobody is saying Tesla won't have a pullback, and it could be a serious pullback, but over the next 5 to 10 years, a lot of investors can see the company being a multi-trillion market cap. https://www.youtube.com/watch?v=rKCZu1-o7iY https://www.youtube.com/watch?v=rKCZu1-o7iY
pydry 6y ago
It's not even the #1 electric car in Norway, and Norway buys a greater % of electric cars than anyone else. I assume it's because everybody is too afraid to short their stock after what happened to the shorters before.
- paulmendoza 6y ago
  I think that’s more because Tesla models right now are all designed for longer commute drivers. The highest selling EV in Norway has a lot less range but is also much cheaper.
rm_-rf_slash 6y ago
Just by having a high valuation Tesla can raise money through equity or debt sales more easily than the competition so Tesla can turn on a dime without being cash crunched. Kind of a self-fulfilling prophecy for any company that ramps up a stock price like that and doesn’t have a CFO asleep at the wheel.

ProjectArcturis 6y ago

I don't own any TSLA, but the bull case would be that they have a 1000-mile head start on their competition, and a unique culture that allows them to be far nimbler than the GMs of the world. In 20 years, when we drive only electric cars, TSLA will be the near-monopolist of that market, similar to Google, Amazon, or Facebook. I don't think I really believe that case, but that's the way the valuation is justified. It's not something that can be captured easily in a discounted cash flow model, because after a couple years you're basically just inventing numbers there. But if you knew for sure that TSLA would succeed in dominating the electric car market, you'd probably buy it at much higher prices than we see today.

remote_phone 6y ago
Tesla has already lost market share in Europe and North America. There are many smaller and cheaper alternatives and that’s what people are buying.
- Closi 6y ago
  I looked at this earlier in the year, and my personal view at the time was that actually other electric cars were a bit cheaper but you get a lot less car. The price difference just isn’t that big in relative terms (the starting prices are all relatively high), but the difference in what you get is huge. And I think that’s part of the allure of Tesla - can a 2010-era-supercar be built for $25k? What about less? I ended up getting a 2nd hand diesel BMW because I got the feeling that the market would move a lot in the next 5 years.
itsoktocry 6y ago
>they have a 1000-mile head start on their competition This is just more abstract phrasing. They make good, albeit expensive, cars that their fan-base seems happy with. They lead in a few things(tech, batteries) and are behind in others (maybe self-driving, definitely quality). Where is the 1000-mile lead?
- howlgarnish 6y ago
  Many people would have said the same about Apple vs Nokia when the first iPhone came out.
  - itsoktocry 6y ago
    >Many people would have said the same about Apple vs Nokia when the first iPhone came out. So Tesla is Nokia in this analogy? I agree, their 1000-mile lead can disappear.
wasdfff 6y ago
The 1000 mile lead ended the day they sold their first car and revealed any and all novel things about their tech to the world.
- peteradio 6y ago
  Yes! You can purchase the talent that produced the success at the very worst case. In the best case you can reverse engineer with much less talent.

sixQuarks 6y ago

Don't let the laid-back nature of this video fool you, this guy has been spot on with TSLA going back at least 2 years. Helped me ride out a 20x return on the stock. He provides a rational way to value TSLA at these levels. Nobody is saying Tesla won't have a pullback, and it could be a serious pullback, but over the next 5 to 10 years, a lot of investors can see the company being a multi-trillion market cap. https://www.youtube.com/watch?v=rKCZu1-o7iY https://www.youtube.com/watch?v=rKCZu1-o7iY

pydry 6y ago

It's not even the #1 electric car in Norway, and Norway buys a greater % of electric cars than anyone else. I assume it's because everybody is too afraid to short their stock after what happened to the shorters before.

paulmendoza 6y ago
I think that’s more because Tesla models right now are all designed for longer commute drivers. The highest selling EV in Norway has a lot less range but is also much cheaper.

rm_-rf_slash 6y ago

Just by having a high valuation Tesla can raise money through equity or debt sales more easily than the competition so Tesla can turn on a dime without being cash crunched. Kind of a self-fulfilling prophecy for any company that ramps up a stock price like that and doesn’t have a CFO asleep at the wheel.