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How does Apple’s valuation compare to every other cell phone maker?
by dd36 5y ago
How does Apple’s valuation compare to every other cell phone maker?
- arcticbull 5y agoApple owns 75% of the entire profit share of the global smartphone business while making 13% of the phones. Tesla isn't even close to that kind of performance. [edited, I mistyped 75% as 85% initially] [1] https://www.counterpointresearch.com/global-handset-market-operating-profit-q2-2021/ https://www.counterpointresearch.com/global-handset-market-o...
- dd36 5y agoAt scale at current margins, Tesla will be substantially more profitable than traditional car makers.
- kaesar14 5y agoWhat current margins? At what scale? Toyota has a best-in-class 6% profit margin, substantially better than its competitors sitting at 3%, and earns 20 billion dollars. Even at the most optimistic margins Tesla is vastly overvalued.
- dd36 5y agoGross margins. Tesla is scaling right now and continuing to innovate on the tech side.
- kaesar14 5y agoOk, so what margin do you see justifying their valuation? 10%? 15%? The margins of a company like Microsoft who makes their money on software (30%)? Even if you used that last figure, they'd more than 80x over valuation on current earnings. This is a car company. There are fundamental limits on how much money you can make.
- colinmhayes 5y agoHow will Tesla keep current margins once every other car company is releasing high quality electric cars?
- dd36 5y agoBattery costs. It has a substantial lead and should continue to as it is far ahead in terms of scaling and reducing cost.
- colinmhayes 5y agoYou think Tesla will have cheaper batteries than literally everyone else forever? Incredibly hard for me to believe that at least one company won't be able to create a competing battery. Differentiating on hardware has never been a way to create a trillion dollar company. It requires lock in via incredibly brand loyalty and Tesla doesn't have a big enough customer base atm.
- dd36 5y agoNot forever but long enough to become the leader. Apple continues to innovate despite plenty of opportunity for everyone else to catch up.
- darth_avocado 5y ago> Once every other company is releasing high quality electric cars? Like who exactly? Only the American automakers are taking this seriously. Most have them have a target of maybe 50% of their offerings to be electric by 2030. Some European brands are now starting to play serious VW at the forefront of it. And the ones resisting the most are the Japanese. Mazda doesn’t even commit to a hybrid and realizing more efficient ICs coming soon in 2024. Toyota and Honda are actively seeking to block incentives to EV makers. And even if startups like Rivian or big players like Ford,GM and VW eventually start making cars at a much better quality, they still have to match the level of vertical integration that Tesla has. The lead they have is no joke.
- 5y ago
- rcMgD2BwE72F 5y agoNot yet. But Tesla's P/E is 147 now at this quarters' rate of profit. That's nothing for a company growing revenues at over 50% while still increasing its margins. Also, Tesla is still production limited (i.e they would steal their competitors' market share if they have a few plants available). The only market where Tesla is not growing its share steeply is where they decided not to prioritize sales. Just look at the Model Y sales in Europe where they finally to make deliveries. Tesla don't even have a pickup to sell yet, which is USA's #1 model.
- arcticbull 5y agoTotally, and at some point in the future, if they're super lucky, they might be worth something around half of what they're worth today lol. I don't think they're going to grow the car market, which means they're worth at most what the car market is today. Further, I sincerely doubt theres a world in which they own 100% of the car market, so that means it's overvalued both now and into the future. Toyota's worth 300B and they have excellent industry-leading margins. Tesla is priced at 900B while shipping a tiny fraction of the cars. [edit] Tesla shipped 241,000 cars this quarter. Toyota shipped 2.2M. Tesla's car deliveries are literally a rounding error against Toyota's. It would take 6 years of 50% YoY growth to match Toyota's shipments alone this year. [edit2] Toyota's PE is 9.6, so once mature, Tesla should also trade right around a 9.6 p/e, if they're really lucky. [1] https://www.statista.com/statistics/267272/worldwide-vehicle-production-of-toyota/ https://www.statista.com/statistics/267272/worldwide-vehicle...
- dd36 5y agoAgain, that doesn’t make sense. Apple being the obvious example. You don’t necessarily revert to a market cap maximum. EVs can have high margins and scale. Tesla is positioned as the Apple of its market. And its business is more than vehicles - a lot more. Stationary batteries also have fat margins.
- random314 5y agoMarket valuation depends on expected future profit margin per car. Not on how many million low margin cars you have already shipped. Walmart has the highest revenue, while Apple has the highest profit. Shipping a bunch of low margin stuff is of little value. The market expects tesla to beat Toyota by an order if magnitude on profit margin per car. As simple as that.
- grey-area 5y agoHow does Apple's profit compare to every other cell phone maker? And how does Tesla's profit compare to every other car manufacturer? Clearly Tesla is very early in their journey, and their valuation and PE is wildly different from Apple, they're not even in the same ballpark. The equivalent in Apple's trajectory would be Apple being valued in 2008 say after the promising iPhone launch at almost 1 trillion, does that sound reasonable to you? In fact they were valued in 2008 at 80 billion, 1/10 of Tesla at present. I think it's too high, the parent thinks it's too high, and even Elon Musk thinks the valuation is too high (as he said twice earlier this year).
- dd36 5y agohttps://www.forbes.com/sites/greatspeculations/2020/10/08/tesla-can-post-apple-like-margins-heres-how/ https://www.forbes.com/sites/greatspeculations/2020/10/08/te... Maybe, maybe not. But they have double the margin of everyone but Toyota and Toyota is dragging its feet on going EV.
- mattnewton 5y agoI think this really captures my view on the stock. There is one electric car in outer space right now, one premium brand. Everyone else is going to be in a race over market share and Tesla has a shot to keep high margins and use those margins to keep finding its lead.
- dd36 5y agoAgreed. Tesla is so far in front tech-wise and continuing to push. They were only talking about 4680 and structural battery packs a year ago and it’s about to go into mass production.
- mupuff1234 5y agoAren't most Teslas basically using Panasonic manufactured batteries?
- ecpottinger 5y agoPanasonic batteries made to Tesla's specs not the general market.
- mupuff1234 5y agoDoesn't that mean that the manufacturing process is more or less a standard one? and that Panasonic has the same battery tech now?
- dd36 5y agoAnd who gets priority in their production plans?
- mupuff1234 5y agoI'm guessing Panasonic will prefer having more then a single costumer but regardless - that's quite a different narrative then "Tesla has a 5 year lead in battery tech".
- kaesar14 5y agoYou mean the most profitable company in the entire world?
- skohan 5y agoDo you think around 50% of the cars on the road in the US will be Teslas?
- henrikschroder 5y agoFor cellphones, there is value in having the same phone as your peers, it gives you status. For cars, there is value in having a different car than your peers, it gives you status. The larger Tesla's market share grows, the more boring it will become to own one, and the more exciting the competition is going to get in the public mind. With comparable competition, Tesla will never ever get a total car market share over 30%.
- skohan 5y ago30% would be insanely optimistic.