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For those who missed it, this is related to Hertz ordering 100,000 Tesla Model 3s: https://www.bloomberg.com/news/articles/2021-10-25/hertz-said-to-order-100-00

For those who missed it, this is related to Hertz ordering 100,000 Tesla Model 3s: https://www.bloomberg.com/news/articles/2021-10-25/hertz-said-to-order-100-000-teslas-in-car-rental-market-shake-up https://www.bloomberg.com/news/articles/2021-10-25/hertz-sai...

Workaccount2 5y ago
Hertz: Places order for $4 billion worth of cars Tesla: Market value increase by $100 billion Yup, this is all very logical. Edit: Guys, we all know the term "Future Value", we all also know its a purposely undefined buzzword you can fit any insanity you want into. Virtually everything a company does adds "Future Value", the question is "How much Future Value". Does selling $4B of cars really signal an entire General Motors worth of value on top of their already insane "Future Value"?
- mygoodaccount 5y ago
  Expected future value. Most rental companies haven't committed to large EV fleets. This changes things. That said I think the current valuation is a joke.
- Kranar 5y ago
  That's correct, the stock market uses information from the present to make a determination about the future. Hertz isn't buying Teslas because they are engaged in charity, they are doing it because they likely came to the conclusion that it's cheaper, or more optimal in some sense, to have a fleet of electric vehicles over ICE vehicles. Unless Hertz made a grave miscalculation, one can expect other vehicle rental companies to come to the same conclusion, along with other companies/industries that maintain large fleets of vehicles. This move further entrenches Tesla in the electric vehicle space, along with all other related technologies (electric charging, insurance, battery technology, etc etc...). The truth is that most other car companies are just not well positioned to transition to electric vehicles.
  - deleted 5y ago
    [deleted]
  - nwiswell 5y ago
    > That's correct, the stock market uses information from the present to make a determination about the future. Hertz isn't buying Teslas because they are engaged in charity, they are doing it because they likely came to the conclusion that it's cheaper, or more optimal in some sense, to have a fleet of electric vehicles over ICE vehicles. Any market participant could _already_ have gone through the same calculus. There is no new public information except the decision itself, which by this reasoning was A) perfectly predictable and B) not inherently worth $100B
    - coralreef 5y ago
      A contractual sales commitment is valued differently compared to a "what if" calculation.
      - missedthecue 5y ago
        As far as I can tell, there is no contractual sales commitment. Just a press release.
    - stevage 5y ago
      Except your average market participant doesn't have the same resources for that analysis as Herz.
      - nwiswell 5y ago
        Many of them have more resources. Hedge funds have been using satellite photography to estimate Tesla's production numbers for years. The price is expected to move if even a few participants have the new information. https://news.ycombinator.com/item?id=20243810 https://news.ycombinator.com/item?id=20243810 Honestly I'm a little dumbfounded that people are arguing this is definitely a rational move in the price while we've got phenomena like GameStop still happening.
- abc_lisper 5y ago
  Haha. Having Hertz as a customer is a huge validation for Tesla. It means other rental fleets will be asked questions about electrification. It also means a bunch of people will test drive Teslas - people who wouldn't otherwise look at it. The car sells itself, because it is great.
  - olivermarks 5y ago
    Wait until an entire parking garage of Teslas goes up in flames, let's see if the stock price budges then... Why aren't the insurance industry more active about this?! https://www.rt.com/news/538335-germany-electric-vehicle-bus-fires/ https://www.rt.com/news/538335-germany-electric-vehicle-bus-...
    - abc_lisper 5y ago
      ok. These things have been discussed on reddit/twitter the last 3-4 years over and over again. Tesla has sold a decent chunk of cars now, from which you can do meaningful projections on it's fire safety. From Tesla's website (https://www.tesla.com/VehicleSafetyReport https://www.tesla.com/VehicleSafetyReport) "From 2012 – 2020, there has been approximately one Tesla vehicle fire for every 205 million miles traveled. By comparison, data from the National Fire Protection Association (NFPA) and U.S. Department of Transportation shows that in the United States there is a vehicle fire for every 19 million miles traveled. In order to provide an apt comparison to NFPA data, Tesla’s data set includes instances of vehicle fires caused by structure fires, arson, and other things unrelated to the vehicle, which account for some of the Tesla vehicle fires over this time period."
      - olivermarks 5y ago
        The last place to look for info on BEV fire safety is a manufacturer's website. Talk to fire fighters, look at the independent stats.
        olivermarks 5y ago
        NTSB: Lithium-Ion Battery Fires in Electric Vehicles - Safety Risks to Emergency Responders https://youtu.be/J6eS6JzBn0k https://youtu.be/J6eS6JzBn0k
- grp000 5y ago
  I think it's more that the $4B Hertz order is a big vote of confidence from a big rental car player that signals a higher likelihood of all the other big rental car companies (since this made the news, I'm assuming other big rental car companies haven't done so, or at least on that scale, at least for an "ordinary" vehicle, since a quick search shows you can rent a Model S from Enterprise, but only from their Exotic's section) to follow suite, and a potential ensuing continuous revenue flow for Tesla as these rental cars end their life-cycles and need to be replaced. Of course these are all just possibilities, essentially bets.
  - csmeder 5y ago
    Also: "You know who Hertz CEO is? The former CEO of Ford. And he didn’t order the Mustang Mex-E. He ordered 100,000 Tesla Model 3" - @WholeMarsBlog And: "To be clear, cars sold to Hertz have no discount. Same price as to consumers." - Elon Musk So you have the former CEO picking Tesla (with GM, Volkswagen, and Ford losing out) and for the first time ever a rental company is paying full price for a 100,000 order.
- baq 5y ago
  What is logical is massive amounts of leverage in the form of call options results in a gamma ramp. Option dealers bought anywhere from $50B to $100B of Tesla today. Such a tremendous injection of capital must affect the price. Gamma ramp down will be equally massive.
  - pakitan 5y ago
    Is this information freely available anywhere? I mean volume breakdown by the type of buyer/seller (institutional/retail/market maker)?
    - baq 5y ago
      There are services which try to infer who’s buying by observing the option chain and correlating with the underlying; they all cost money. I think spotgamma is the most well known.
      - pakitan 5y ago
        Thanks!
- csmeder 5y ago
  If you think that is wild, did you know Tesla is worth almost 1,000 Palms! The iPhone launched in '07 & AAPL saw its cap go from $100b → $2,400b in 14 yrs In the same 14 yrs Nokia: $110b → $32b RIM: $72b → $6b Palm: $54b→ $1.2b FYI, the global auto industry is not Apple in this example
- zxcb1 5y ago
  Financial engineering with debt and leverage; central bank policy breaks markets. It ends with megacorporations, oligarchs, inequality and tears.
- chemmail 5y ago
  The real question is. Have you ever driven a Tesla?
SrslyJosh 5y ago
I sure hope they're going to disable most of the autopilot features. The last thing we need is thousands of rental customers doing "look ma no hands!" for giggles on unfamiliar roads.

Workaccount2 5y ago

Hertz: Places order for $4 billion worth of cars Tesla: Market value increase by $100 billion Yup, this is all very logical. Edit: Guys, we all know the term "Future Value", we all also know its a purposely undefined buzzword you can fit any insanity you want into. Virtually everything a company does adds "Future Value", the question is "How much Future Value". Does selling $4B of cars really signal an entire General Motors worth of value on top of their already insane "Future Value"?

mygoodaccount 5y ago
Expected future value. Most rental companies haven't committed to large EV fleets. This changes things. That said I think the current valuation is a joke.
Kranar 5y ago
That's correct, the stock market uses information from the present to make a determination about the future. Hertz isn't buying Teslas because they are engaged in charity, they are doing it because they likely came to the conclusion that it's cheaper, or more optimal in some sense, to have a fleet of electric vehicles over ICE vehicles. Unless Hertz made a grave miscalculation, one can expect other vehicle rental companies to come to the same conclusion, along with other companies/industries that maintain large fleets of vehicles. This move further entrenches Tesla in the electric vehicle space, along with all other related technologies (electric charging, insurance, battery technology, etc etc...). The truth is that most other car companies are just not well positioned to transition to electric vehicles.
- deleted 5y ago
  [deleted]
- nwiswell 5y ago
  > That's correct, the stock market uses information from the present to make a determination about the future. Hertz isn't buying Teslas because they are engaged in charity, they are doing it because they likely came to the conclusion that it's cheaper, or more optimal in some sense, to have a fleet of electric vehicles over ICE vehicles. Any market participant could _already_ have gone through the same calculus. There is no new public information except the decision itself, which by this reasoning was A) perfectly predictable and B) not inherently worth $100B
  - coralreef 5y ago
    A contractual sales commitment is valued differently compared to a "what if" calculation.
    - missedthecue 5y ago
      As far as I can tell, there is no contractual sales commitment. Just a press release.
  - stevage 5y ago
    Except your average market participant doesn't have the same resources for that analysis as Herz.
    - nwiswell 5y ago
      Many of them have more resources. Hedge funds have been using satellite photography to estimate Tesla's production numbers for years. The price is expected to move if even a few participants have the new information. https://news.ycombinator.com/item?id=20243810 https://news.ycombinator.com/item?id=20243810 Honestly I'm a little dumbfounded that people are arguing this is definitely a rational move in the price while we've got phenomena like GameStop still happening.
abc_lisper 5y ago
Haha. Having Hertz as a customer is a huge validation for Tesla. It means other rental fleets will be asked questions about electrification. It also means a bunch of people will test drive Teslas - people who wouldn't otherwise look at it. The car sells itself, because it is great.
- olivermarks 5y ago
  Wait until an entire parking garage of Teslas goes up in flames, let's see if the stock price budges then... Why aren't the insurance industry more active about this?! https://www.rt.com/news/538335-germany-electric-vehicle-bus-fires/ https://www.rt.com/news/538335-germany-electric-vehicle-bus-...
  - abc_lisper 5y ago
    ok. These things have been discussed on reddit/twitter the last 3-4 years over and over again. Tesla has sold a decent chunk of cars now, from which you can do meaningful projections on it's fire safety. From Tesla's website (https://www.tesla.com/VehicleSafetyReport https://www.tesla.com/VehicleSafetyReport) "From 2012 – 2020, there has been approximately one Tesla vehicle fire for every 205 million miles traveled. By comparison, data from the National Fire Protection Association (NFPA) and U.S. Department of Transportation shows that in the United States there is a vehicle fire for every 19 million miles traveled. In order to provide an apt comparison to NFPA data, Tesla’s data set includes instances of vehicle fires caused by structure fires, arson, and other things unrelated to the vehicle, which account for some of the Tesla vehicle fires over this time period."
    - olivermarks 5y ago
      The last place to look for info on BEV fire safety is a manufacturer's website. Talk to fire fighters, look at the independent stats.
      - olivermarks 5y ago
        NTSB: Lithium-Ion Battery Fires in Electric Vehicles - Safety Risks to Emergency Responders https://youtu.be/J6eS6JzBn0k https://youtu.be/J6eS6JzBn0k
grp000 5y ago
I think it's more that the $4B Hertz order is a big vote of confidence from a big rental car player that signals a higher likelihood of all the other big rental car companies (since this made the news, I'm assuming other big rental car companies haven't done so, or at least on that scale, at least for an "ordinary" vehicle, since a quick search shows you can rent a Model S from Enterprise, but only from their Exotic's section) to follow suite, and a potential ensuing continuous revenue flow for Tesla as these rental cars end their life-cycles and need to be replaced. Of course these are all just possibilities, essentially bets.
- csmeder 5y ago
  Also: "You know who Hertz CEO is? The former CEO of Ford. And he didn’t order the Mustang Mex-E. He ordered 100,000 Tesla Model 3" - @WholeMarsBlog And: "To be clear, cars sold to Hertz have no discount. Same price as to consumers." - Elon Musk So you have the former CEO picking Tesla (with GM, Volkswagen, and Ford losing out) and for the first time ever a rental company is paying full price for a 100,000 order.
baq 5y ago
What is logical is massive amounts of leverage in the form of call options results in a gamma ramp. Option dealers bought anywhere from $50B to $100B of Tesla today. Such a tremendous injection of capital must affect the price. Gamma ramp down will be equally massive.
- pakitan 5y ago
  Is this information freely available anywhere? I mean volume breakdown by the type of buyer/seller (institutional/retail/market maker)?
  - baq 5y ago
    There are services which try to infer who’s buying by observing the option chain and correlating with the underlying; they all cost money. I think spotgamma is the most well known.
    - pakitan 5y ago
      Thanks!
csmeder 5y ago
If you think that is wild, did you know Tesla is worth almost 1,000 Palms! The iPhone launched in '07 & AAPL saw its cap go from $100b → $2,400b in 14 yrs In the same 14 yrs Nokia: $110b → $32b RIM: $72b → $6b Palm: $54b→ $1.2b FYI, the global auto industry is not Apple in this example
zxcb1 5y ago
Financial engineering with debt and leverage; central bank policy breaks markets. It ends with megacorporations, oligarchs, inequality and tears.
chemmail 5y ago
The real question is. Have you ever driven a Tesla?

SrslyJosh 5y ago

I sure hope they're going to disable most of the autopilot features. The last thing we need is thousands of rental customers doing "look ma no hands!" for giggles on unfamiliar roads.