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"The market can remain irrational longer than you can remain solvent." And it will continue to go up until it doesn't. Maybe Tesla has a vault of unicorn blood

"The market can remain irrational longer than you can remain solvent." And it will continue to go up until it doesn't. Maybe Tesla has a vault of unicorn blood and is just waiting for the perfect time to unveil it, but as a car company, their stock valuation makes absolutely no sense. It would take a miracle for Tesla to overtake more than all 3 top automakers combined. There is zero indication this has any possibility of becoming a reality. Tesla's stock performance is in pure FOMO land now.

synaesthesisx 5y ago
> until it doesn't. That's not necessarily the case. Financials are irrelevant for stocks like Tesla, and it can continue to moon indefinitely if the market dictates it.
- Wowfunhappy 5y ago
  So I guess “stocks like Tesla” are really just tulip petals? What are people paying for?
  - systemvoltage 5y ago
    It's a great question. Future potential, leadership, tech stack, manufacturing capacity, etc. There is a lot of "soft" aspects of running a company and valuation is one of the most difficult/error-prone things to do. Damodaran's Google talk kind of does a good job describing valuation of high-growth companies (it is deceivingly simple): https://www.youtube.com/watch?v=Z5chrxMuBoo https://www.youtube.com/watch?v=Z5chrxMuBoo
- ac29 5y ago
  > it can continue to moon indefinitely if the market dictates it Not really. The higher the price gets, the more new money it takes to move the price higher. TSLA has done significantly worse than the overall US stock market this year.
JPKab 5y ago
I don't disagree with you, but the common retort I hear to this sentiment is that "they aren't a car company, they are a battery/energy storage company that currently sells cars". What are your thoughts on that sentiment? Just curious to hear from rational investors on that specific item.
- hef19898 5y ago
  Which is a funny idea, since the batteries are coming from Panasonic.
  - TX0098812 5y ago
    Afaik only some of them are from Panasonic.
    - deelowe 5y ago
      s/some/most
      - TX0098812 5y ago
        They're also building battery factories.
        deelowe 5y ago
        So are tons of other companies. The largest battery plant in the southeast just went up near me. It’s not built by Tesla.
mkr-hn 5y ago
Unicorn blood is way overrated. The effects don't last long.
nickik 5y ago
Tesla is very different from other car companies. - Tesla owns a large global infrastructure for charging that they produce themselves. And produce a lot of home and destination charges as well. - Tesla has a very large expanding internal battery production and will be one of the bigger battery manufacturers in the world themselves. - Other car companies down own their distribution channels and thus make lower margin per car - Tesla is market leading in grid storage a gigantic market that is about to grow for the next 20 years straight - Tesla is leading in home solar/storage market that will also be growing for then ext 20 years - Tesla has the potential leading in self-driving (yes make your jokes now HN) - Legacy car makers actually make a huge amount of their money from out of warranty part sales, a channel that Tesla has yet to take advantage of because most of the time they have far more new cars and service is still losing money for them. Steady state the huge service network they are building will be very profitable. Tesla has the clear potential to continue growing 50%+ with improving margin (localization of production, vertical integration) just with production capacity that's already in production. While the other car makers are at series risk of having a huge amount of legacy infrastructure that is losing value while their still large ICE production could very well turn negative margin as volume decrease economics of scale. You can still call it to high, but saying its made up nonsense is equally incorrect. Go look at the Wallstreet models, the stock price is defensible even with not all that aggressive assumptions for the next 10 years. Far less aggressive then Tesla internal targets. It all depends if you believe Tesla can continue to execute. And what position they will be in by 2030 and then what you believe the next 10 years will look like.

synaesthesisx 5y ago

> until it doesn't. That's not necessarily the case. Financials are irrelevant for stocks like Tesla, and it can continue to moon indefinitely if the market dictates it.

Wowfunhappy 5y ago
So I guess “stocks like Tesla” are really just tulip petals? What are people paying for?
- systemvoltage 5y ago
  It's a great question. Future potential, leadership, tech stack, manufacturing capacity, etc. There is a lot of "soft" aspects of running a company and valuation is one of the most difficult/error-prone things to do. Damodaran's Google talk kind of does a good job describing valuation of high-growth companies (it is deceivingly simple): https://www.youtube.com/watch?v=Z5chrxMuBoo https://www.youtube.com/watch?v=Z5chrxMuBoo
ac29 5y ago
> it can continue to moon indefinitely if the market dictates it Not really. The higher the price gets, the more new money it takes to move the price higher. TSLA has done significantly worse than the overall US stock market this year.

JPKab 5y ago

I don't disagree with you, but the common retort I hear to this sentiment is that "they aren't a car company, they are a battery/energy storage company that currently sells cars". What are your thoughts on that sentiment? Just curious to hear from rational investors on that specific item.

hef19898 5y ago
Which is a funny idea, since the batteries are coming from Panasonic.
- TX0098812 5y ago
  Afaik only some of them are from Panasonic.
  - deelowe 5y ago
    s/some/most
    - TX0098812 5y ago
      They're also building battery factories.
      - deelowe 5y ago
        So are tons of other companies. The largest battery plant in the southeast just went up near me. It’s not built by Tesla.

mkr-hn 5y ago

Unicorn blood is way overrated. The effects don't last long.

nickik 5y ago

Tesla is very different from other car companies. - Tesla owns a large global infrastructure for charging that they produce themselves. And produce a lot of home and destination charges as well. - Tesla has a very large expanding internal battery production and will be one of the bigger battery manufacturers in the world themselves. - Other car companies down own their distribution channels and thus make lower margin per car - Tesla is market leading in grid storage a gigantic market that is about to grow for the next 20 years straight - Tesla is leading in home solar/storage market that will also be growing for then ext 20 years - Tesla has the potential leading in self-driving (yes make your jokes now HN) - Legacy car makers actually make a huge amount of their money from out of warranty part sales, a channel that Tesla has yet to take advantage of because most of the time they have far more new cars and service is still losing money for them. Steady state the huge service network they are building will be very profitable. Tesla has the clear potential to continue growing 50%+ with improving margin (localization of production, vertical integration) just with production capacity that's already in production. While the other car makers are at series risk of having a huge amount of legacy infrastructure that is losing value while their still large ICE production could very well turn negative margin as volume decrease economics of scale. You can still call it to high, but saying its made up nonsense is equally incorrect. Go look at the Wallstreet models, the stock price is defensible even with not all that aggressive assumptions for the next 10 years. Far less aggressive then Tesla internal targets. It all depends if you believe Tesla can continue to execute. And what position they will be in by 2030 and then what you believe the next 10 years will look like.