19 ms·

Lots of talk about balking at this valuation, and that is probably a reasonable reaction, but as others have said, I want to point out that companies are valued

by qqtt 5y ago

Lots of talk about balking at this valuation, and that is probably a reasonable reaction, but as others have said, I want to point out that companies are valued based on their future and projected growth, not how much they are worth today. Much has been made about Tesla being worth more than all other automakers combined, but let's look at the growth. Tesla Q3 Revenue: 13.76B, Year over year growth: 56% Tesla Q3 Net Income: 1.6B, Year over year growth: 388% GM Q3 Revenue: 26.78B, Year over year growth: -24% GM Q3 Net Income: 2.42B, Year over year growth: -40% Tesla is growing like bonkers, wildly more profitable, and has a much brighter future than GM given these trajectories. It's almost like either GM is severely overvalued at 90B market cap or Tesla is undervalued at 1T. Tesla has also proven that traditional automakers really struggle to keep up with the electric car race - from software to supply chain. Rivian, like Tesla, is built top to bottom to play in this market, with the added backing of Amazon and products tailor made for enterprise scale needs that companies like Amazon need. Of course Rivian is a risky investment today - their stock is priced for perfection. We saw what happened last quarter when stocks priced for perfection fall short (take a look at Snapchat). But plenty of these arguments "Rivian is only selling 1000 cars!" also applied to Tesla about 10 years ago. A business is valued based on its future prospects. Growth companies are risky. Edit to add Ford numbers: Ford Q3 Revenue: 35.68B , Year over year growth: -4% Ford Q3 Net income: 1.8B, Year over year growth: -23% Also want to point out - all automakers are operating in the same pandemic - Ford, GM, and Tesla are all dealing with supply chain issues and chip shortages.

maxerickson 5y ago
What year will Earth be fully converted to a giant ball of Tesla vehicles?
- Swenrekcah 5y ago
  If Tesla sells this year 800,000 units of 2 tons each, and keep up 388% growth every year, then according to my calculations they will have depleted earths crust in a little over 19 years.
  - onlyrealcuzzo 5y ago
    That's why there's SpaceX to mine asteroids! /s By year 8, they'd be selling 2 cars per person on the planet - so any extrapolating that this growth rate can continue for even 4 years - must think we've reached the singularity and will soon be living in an alien world. For context, by year 19, they'd be selling ~39M cars per person...
rootusrootus 5y ago
> Tesla is growing like bonkers, wildly more profitable, and has a much brighter future than GM given these trajectories. This seems to assume that the pandemic economic situation is permanent. I think also it doesn't really explain Ford vs Tesla.
tw04 5y ago
>Tesla has also proven that traditional automakers really struggle to keep up with the electric car race - from software to supply chain. Hardly, Tesla has proven that they were right betting on electric being the future. SuperCruise by most accounts is ahead of "FSD" in real-world driving. GM has pivoted in less than 5 years to what it took Tesla 18 years to build. 5 years from now we can have a conversation about whether GM/Ford/Stellantis can compete or not. Saying that Tesla has some unsurmountable lead when the big 3 have literally just started releasing their first round of EVs is silly. Having test driven a Mach-E and a Model-Y, I would wager the non-tesla fanboy will choose the Mach-E every time. Nicer interior, similar enough performance, and a manufacturer that has a history of actually having parts to fix cars when something breaks. The horror stories of cars sitting for months waiting on basic parts from Tesla is enough to make me think twice about ever owning one.
- andreilys 5y ago
  SuperCruise by most accounts is ahead of "FSD" in real-world driving. Source? SuperCruise is geofenced to highways, so it can't even drive in areas that FSD can so I'm not sure this is the right comparison.
  - mellavora 5y ago
    what areas can FSD drive in?
    - leesec 5y ago
      I don't even have the FSD beta but my autopilot can turn on anywhere there's lane lines basically.
    - beambot 5y ago
      Apples don't have orange skin.
  - ajross 5y ago
    Yeah, this is a meme that circulates in the $TSLAQ world, often appearing alongside shrieks of "Panel Gaps!". There really isn't a source, Super Cruise just isn't very available in public yet (just a tiny handful of cars have it, with probably less than 20k users). The core of the point is generally that Tesla AP is deployed as a hands-on solution, requiring regular steering wheel input (just twisting the wheel a bit), where GM ships this in cars with cameras pointed at the driver (Tesla has them too now, though the wheel nags still exist) that take the entire monitoring load. That makes it "hands free", and therefore better. This is often combined with a conflation of "hands free" with SAE L3 Autonomy (which isn't correct) to try to emphasize the point, skipping the fact that the hands-free areas are limited just just a few hand-vetted highways. All Tesla would need to do to compete with that feature would be to implement the same geofencing, basically. But that's not where they're aiming. I mean, in the real world, AP is pretty amazing and SC is mostly vaporware. My car took me 429 miles last Thursday and the only input required beyond wheel nags was some editorial differences I had with it about proper lane selection (and even then, I was only right about 60% of the time).
tootie 5y ago
It's kinda shocking how poorly traditional auto manufacturers are failing at keeping pace with Tesla, but I think that's not going to last forever. Many have already committed to ending their production of gasoline vehicles in very short order. I think a good example to look at is how the hybrid market has shifted since the Prius. Toyota blew everyone out of the water for years, but sales have plummeted in recent years as competition has caught up. Rivian has even less of cushion since the electric F-150 is due to hit dealerships next year.
- nikanj 5y ago
  Tesla sales process features up to 95% less slimy car salespeople. I’d pay a premium to not have to deal with the local Ford/GM/etc dealership, who are all about scamming me into overpriced financing deals. Traditional auto manufacturers need to bring the buying process to this century, but that would sour their existing sales pipeline. I believe this conondrum is called ”local optimum”
  - SavantIdiot 5y ago
    >t scamming me into overpriced financing deals. Um, you are admitting that you can be scammed. If you don't understand loans, yes, you can be scammed. Don't admit that. The last new car I bought: I walked into the lot, said I want that one, and took the lowest interest loan for 48 months. I didn't want a 72 month loan. I didn't want an extended warranty. I was done with the sales person in 15 minutes, and done with the finance department in 45 minutes. It's all in how you manage the situation. If you waffle and flake and can't decide, or don't understand loans or pointless "extras", then you're toast.
    - thatswrong0 5y ago
      I just bought a car. I wanted to pay cash, and made it clear I would come back with the a cashier check the next day when my bank open. They said in order to “lock” the car in for me overnight, that I’d have to sign up for a loan (that I could just pay off immediately). It took a bunch of back and forth to make it clear I just wanted to pay cash and I’d be back tomorrow with a check. They finally relented and said ok we’ll put a complimentary hold on the car and accepted the fact I was paying cash. Then of course after finalizing that they pushed a bunch of vastly overpriced maintenance programs and severely misrepresented the expected costs of said maintenance if I didn’t purchase the plan. At least they had the courtesy to give me the time to quickly run the numbers in order to verify it was a terrible deal for me. The whole point is that buying a Tesla doesn’t involve this pointless, anti-consumer, borderline lying, slimey process. People shouldn’t have to worry about being scammed when making one of the largest purchases in their life. The traditional dealership model is terrible for your average consumer. Why on earth are you defending that?
jakeinspace 5y ago
The numbers for GM are explained by the chip shortage and other supply chain issues, which Tesla is weathering better. Assuming these are transitory issues, I don't think the growth gap between telsa and GM is quite as large as you're indicating.
GDC7 5y ago
> Lots of talk about balking at this valuation, and that is probably a reasonable reaction, but as others have said, I want to point out that companies are valued based on their future and projected growth, not how much they are worth today. This is something which should be expanded upon: Yes, people are behaving like that across the board, it is becoming a popularity contest...what matters is which company has the potential to achieve the biggest size, the biggest scope, the biggest footprint and nothing else. It's fueling valuations. BUT size, scope and footprint find their financial expression in REVENUES, not PROFITS. So if you are trading be mindful that people are falling in love with revenues and not even considering cost of goods sold or profits, but historically the profit metric is undefeated. We might as well be in a new paradigm, but all things considered it doesn't feel that bad to miss out on money because you missed a paradigm shift happening in the brains of millions of people who are not yourself.
Joeri 5y ago
I don’t understand why people think tesla will keep growing at this rate. To grow they’ll need to sell more cars, and for that they will need to sell cars that cost a lot less, something they are not geared to do. Tesla is not apple, they’re not good at making and maintaining products at low cost in massive volume, and they don’t really seem to be getting better at it. So why again is it reasonable to assume they’re going to keep growing like this for years to come?
- leesec 5y ago
  Tesla's margins keep getting better
- sbierwagen 5y ago
  Notoriously, Tesla has raised the price of the Model 3 by 23% this year: https://insideevs.com/news/545712/us-tesla-model3y-prices-up1000/ https://insideevs.com/news/545712/us-tesla-model3y-prices-up... To hit their volume targets, either they'll need to cut prices again in the near future, or the price of all other cars in the market need to rise in lockstep.
  - KptMarchewa 5y ago
    So, they raised the prices, massively expanded production, and still have insane backlog and you think it's a bad thing?
    - sudosysgen 5y ago
      Yes. Because rising prices means that it's easier for their competitors to eventually overtake them. Having a backlog makes that even worse.
      - pedalpete 5y ago
        I'm sure I don't understand your logic. They raised prices which improves their margins. They can use that money to build more factories (which they are already building) and pay down debt, putting them in a stronger position. The backlog gets cleared by these new factories which can try to take up the excess demand. What competitor is overtaking them? My understanding is that you can get any electric car you want, except a Tesla. That means people aren't buying the competitors vehicles. The competitors don't have demand, Tesla does. https://insideevs.com/news/530606/us-ford-mache-sales-august2021/ https://insideevs.com/news/530606/us-ford-mache-sales-august...
timr 5y ago
Tesla is currently valued at about $1,000,000 per car to be delivered in 2021.
greedo 5y ago
Comparing YoY quarters especially during a pandemic is not really a very good methodology for determining market trends. Even when you add a qualifier like "given these trajectories." Also, I think you're underestimating Tesla's competition by focusing on GM. Ford is a much larger threat to Tesla than GM, and already has an EV that's roughly comparable in price/performance to the Model Y. The Mustang Mach-E should be evaluated by any prospective EV buyer, and the F-150 Lightning has the potential to leave the Cybertruck stillborn. Rivian has none of the advantages of Tesla (name recognition, Supercharger network) nor none of the advantages of the traditional ICE manufacturers (volume, fit and finish, dealer network). Other than Amazon's backing, Rivian is one of the last companies I'd consider for buying an EV.
- tinyhouse 5y ago
  How many Ford sedans do you see on out there compared to Toyota/Subaru/Honda/etc? You know why? Shitty reputation. Transmission issues, class action lawsuits, etc. I'm looking to buy a car now and have a multiple friends who bought cars recently. None of use even looked at a Ford. We'll see if they can build their reputation in the EV space. (I assume they have a better reputation with pick up trucks)
  - greedo 5y ago
    Ford dominates in trucks. The F-150 has been one of the best selling vehicles in North America for decades. And yes, Ford sedans suck, which is why Ford is focusing on Mustang (both the EV and the ICE) and SUVs.
- eldaisfish 5y ago
  people - especially on tech forums - have a tendency to underestimate the value of accumulated business knowledge. I'm glad you mentioned Ford and their electric pickup truck. Ford make a series of some of the most durable and best-selling pickup trucks the world over. Tesla, on the other hand, have zero experience building rugged vehicles and their teething troubles will be immense. Ford, meanwhile, have been building rugged vehicles for decades. I would argue Rivian's position is similar to Tesla's in that they don't have the level of know-how that Ford do. Despite all the justifications, i cannot see how Tesla's model will scale beyond developed markets.
onlyrealcuzzo 5y ago
Since Tesla is now the elephant in the room - it's possible Tesla is distorting the entire auto industry. Tesla was one of the 5 largest companies in the world - something an auto manufacturer hasn't been in almost 50 years. Tesla had BY FAR the highest P/E ratio for any company of that market cap (as a percentage of global wealth) in history. Tesla's revenue growth is not much bigger than Alphabet's or Apple's - and these are companies with orders of magnitude more revenue and profit. For the last 50-ish years - outside of a few small companies (Ferrari, etc) - auto manufacturing has been a pretty terrible business. Tesla people keep trying to say that Tesla is really an infrastructure play or an Internet company or a services companies or even a space company - but... currently it's not. And even if it became any of those things - even at it's current growth rate - its P/E to growth rate is still unbelievably high. I don't really care if GM and Ford and Rivian are now overvalued - and compared to them Tesla is undervalued. Auto manufacturing is not suddenly going to become the most profitable business in the world. People aren't going to suddenly start paying more for cars than housing. People aren't going to suddenly own 30 cars a piece. Tesla is never going to grow enough to be worth it's current market cap. But the market can stay irrational longer than you can stay solvent - and I wouldn't take a bet that Tesla crashes if my life depended on it.
- enchiridion 5y ago
  Tesla is not saying that it is a space or internet company, that is SpaceX.
- runako 5y ago
  > Tesla's revenue growth is not much bigger than Alphabet's or Apple's - and these are companies with orders of magnitude more revenue and profit. I'm not that big of a Tesla bull, but you have to remember that stocks trade on forward expectations. The trillion $+ market cap companies basically have saturated their primary markets. Microsoft is not likely to find another billion desktop PCs onto which to sell a US-priced Windows/Office suite anytime soon. By contrast, if you buy the Tesla story, they are really just getting started. > Auto manufacturing is not suddenly going to become the most profitable business in the world. I tend to agree with this. However, it's worth noting that Tesla's margin profile is significantly different than all legacy automakers. Their gross margin is ~30%, which is within striking distance of AMD's. And Tesla is still sub-scale for the auto industry. EVs are a different beast than traditional ICE vehicles, so margins will initially be better on EVs for all EV manufacturers.
deleted 5y ago
[deleted]
tdrdt 5y ago
Today companies are valued by how much money investers think they can make from buying stock.
propogandist 5y ago
you should disclose how much of the net revenue comes from selling tax credits. Telsa is not making money from vehicles yet from what I recall. Rivian will be a long way away from making money on tax credits.
- panick21_ 5y ago
  > Telsa is not making money from vehicles yet from what I recall. Are you a time traveler from 2015? Tesla is having industry leading margins. They are currently at almost 30% automotive margin.
  - propogandist 5y ago
    I was remembering an article like the one below [1] on profitability. Looked through Q3 '21 results and it seems they're at ~29% margin, excluding tax credits now [1] https://www.cnbc.com/2020/07/23/teslas-sale-of-environmental-credits-help-drive-to-profitability.html https://www.cnbc.com/2020/07/23/teslas-sale-of-environmental...

by qqtt 5y ago

maxerickson 5y ago

What year will Earth be fully converted to a giant ball of Tesla vehicles?

Swenrekcah 5y ago
If Tesla sells this year 800,000 units of 2 tons each, and keep up 388% growth every year, then according to my calculations they will have depleted earths crust in a little over 19 years.
- onlyrealcuzzo 5y ago
  That's why there's SpaceX to mine asteroids! /s By year 8, they'd be selling 2 cars per person on the planet - so any extrapolating that this growth rate can continue for even 4 years - must think we've reached the singularity and will soon be living in an alien world. For context, by year 19, they'd be selling ~39M cars per person...

rootusrootus 5y ago

> Tesla is growing like bonkers, wildly more profitable, and has a much brighter future than GM given these trajectories. This seems to assume that the pandemic economic situation is permanent. I think also it doesn't really explain Ford vs Tesla.

tw04 5y ago

>Tesla has also proven that traditional automakers really struggle to keep up with the electric car race - from software to supply chain. Hardly, Tesla has proven that they were right betting on electric being the future. SuperCruise by most accounts is ahead of "FSD" in real-world driving. GM has pivoted in less than 5 years to what it took Tesla 18 years to build. 5 years from now we can have a conversation about whether GM/Ford/Stellantis can compete or not. Saying that Tesla has some unsurmountable lead when the big 3 have literally just started releasing their first round of EVs is silly. Having test driven a Mach-E and a Model-Y, I would wager the non-tesla fanboy will choose the Mach-E every time. Nicer interior, similar enough performance, and a manufacturer that has a history of actually having parts to fix cars when something breaks. The horror stories of cars sitting for months waiting on basic parts from Tesla is enough to make me think twice about ever owning one.

andreilys 5y ago
SuperCruise by most accounts is ahead of "FSD" in real-world driving. Source? SuperCruise is geofenced to highways, so it can't even drive in areas that FSD can so I'm not sure this is the right comparison.
- mellavora 5y ago
  what areas can FSD drive in?
  - leesec 5y ago
    I don't even have the FSD beta but my autopilot can turn on anywhere there's lane lines basically.
  - beambot 5y ago
    Apples don't have orange skin.
- ajross 5y ago
  Yeah, this is a meme that circulates in the $TSLAQ world, often appearing alongside shrieks of "Panel Gaps!". There really isn't a source, Super Cruise just isn't very available in public yet (just a tiny handful of cars have it, with probably less than 20k users). The core of the point is generally that Tesla AP is deployed as a hands-on solution, requiring regular steering wheel input (just twisting the wheel a bit), where GM ships this in cars with cameras pointed at the driver (Tesla has them too now, though the wheel nags still exist) that take the entire monitoring load. That makes it "hands free", and therefore better. This is often combined with a conflation of "hands free" with SAE L3 Autonomy (which isn't correct) to try to emphasize the point, skipping the fact that the hands-free areas are limited just just a few hand-vetted highways. All Tesla would need to do to compete with that feature would be to implement the same geofencing, basically. But that's not where they're aiming. I mean, in the real world, AP is pretty amazing and SC is mostly vaporware. My car took me 429 miles last Thursday and the only input required beyond wheel nags was some editorial differences I had with it about proper lane selection (and even then, I was only right about 60% of the time).

tootie 5y ago

It's kinda shocking how poorly traditional auto manufacturers are failing at keeping pace with Tesla, but I think that's not going to last forever. Many have already committed to ending their production of gasoline vehicles in very short order. I think a good example to look at is how the hybrid market has shifted since the Prius. Toyota blew everyone out of the water for years, but sales have plummeted in recent years as competition has caught up. Rivian has even less of cushion since the electric F-150 is due to hit dealerships next year.

nikanj 5y ago
Tesla sales process features up to 95% less slimy car salespeople. I’d pay a premium to not have to deal with the local Ford/GM/etc dealership, who are all about scamming me into overpriced financing deals. Traditional auto manufacturers need to bring the buying process to this century, but that would sour their existing sales pipeline. I believe this conondrum is called ”local optimum”
- SavantIdiot 5y ago
  >t scamming me into overpriced financing deals. Um, you are admitting that you can be scammed. If you don't understand loans, yes, you can be scammed. Don't admit that. The last new car I bought: I walked into the lot, said I want that one, and took the lowest interest loan for 48 months. I didn't want a 72 month loan. I didn't want an extended warranty. I was done with the sales person in 15 minutes, and done with the finance department in 45 minutes. It's all in how you manage the situation. If you waffle and flake and can't decide, or don't understand loans or pointless "extras", then you're toast.
  - thatswrong0 5y ago
    I just bought a car. I wanted to pay cash, and made it clear I would come back with the a cashier check the next day when my bank open. They said in order to “lock” the car in for me overnight, that I’d have to sign up for a loan (that I could just pay off immediately). It took a bunch of back and forth to make it clear I just wanted to pay cash and I’d be back tomorrow with a check. They finally relented and said ok we’ll put a complimentary hold on the car and accepted the fact I was paying cash. Then of course after finalizing that they pushed a bunch of vastly overpriced maintenance programs and severely misrepresented the expected costs of said maintenance if I didn’t purchase the plan. At least they had the courtesy to give me the time to quickly run the numbers in order to verify it was a terrible deal for me. The whole point is that buying a Tesla doesn’t involve this pointless, anti-consumer, borderline lying, slimey process. People shouldn’t have to worry about being scammed when making one of the largest purchases in their life. The traditional dealership model is terrible for your average consumer. Why on earth are you defending that?

jakeinspace 5y ago

The numbers for GM are explained by the chip shortage and other supply chain issues, which Tesla is weathering better. Assuming these are transitory issues, I don't think the growth gap between telsa and GM is quite as large as you're indicating.

GDC7 5y ago

> Lots of talk about balking at this valuation, and that is probably a reasonable reaction, but as others have said, I want to point out that companies are valued based on their future and projected growth, not how much they are worth today. This is something which should be expanded upon: Yes, people are behaving like that across the board, it is becoming a popularity contest...what matters is which company has the potential to achieve the biggest size, the biggest scope, the biggest footprint and nothing else. It's fueling valuations. BUT size, scope and footprint find their financial expression in REVENUES, not PROFITS. So if you are trading be mindful that people are falling in love with revenues and not even considering cost of goods sold or profits, but historically the profit metric is undefeated. We might as well be in a new paradigm, but all things considered it doesn't feel that bad to miss out on money because you missed a paradigm shift happening in the brains of millions of people who are not yourself.

Joeri 5y ago

I don’t understand why people think tesla will keep growing at this rate. To grow they’ll need to sell more cars, and for that they will need to sell cars that cost a lot less, something they are not geared to do. Tesla is not apple, they’re not good at making and maintaining products at low cost in massive volume, and they don’t really seem to be getting better at it. So why again is it reasonable to assume they’re going to keep growing like this for years to come?

leesec 5y ago
Tesla's margins keep getting better
sbierwagen 5y ago
Notoriously, Tesla has raised the price of the Model 3 by 23% this year: https://insideevs.com/news/545712/us-tesla-model3y-prices-up1000/ https://insideevs.com/news/545712/us-tesla-model3y-prices-up... To hit their volume targets, either they'll need to cut prices again in the near future, or the price of all other cars in the market need to rise in lockstep.
- KptMarchewa 5y ago
  So, they raised the prices, massively expanded production, and still have insane backlog and you think it's a bad thing?
  - sudosysgen 5y ago
    Yes. Because rising prices means that it's easier for their competitors to eventually overtake them. Having a backlog makes that even worse.
    - pedalpete 5y ago
      I'm sure I don't understand your logic. They raised prices which improves their margins. They can use that money to build more factories (which they are already building) and pay down debt, putting them in a stronger position. The backlog gets cleared by these new factories which can try to take up the excess demand. What competitor is overtaking them? My understanding is that you can get any electric car you want, except a Tesla. That means people aren't buying the competitors vehicles. The competitors don't have demand, Tesla does. https://insideevs.com/news/530606/us-ford-mache-sales-august2021/ https://insideevs.com/news/530606/us-ford-mache-sales-august...

timr 5y ago

Tesla is currently valued at about $1,000,000 per car to be delivered in 2021.

greedo 5y ago

Comparing YoY quarters especially during a pandemic is not really a very good methodology for determining market trends. Even when you add a qualifier like "given these trajectories." Also, I think you're underestimating Tesla's competition by focusing on GM. Ford is a much larger threat to Tesla than GM, and already has an EV that's roughly comparable in price/performance to the Model Y. The Mustang Mach-E should be evaluated by any prospective EV buyer, and the F-150 Lightning has the potential to leave the Cybertruck stillborn. Rivian has none of the advantages of Tesla (name recognition, Supercharger network) nor none of the advantages of the traditional ICE manufacturers (volume, fit and finish, dealer network). Other than Amazon's backing, Rivian is one of the last companies I'd consider for buying an EV.

tinyhouse 5y ago
How many Ford sedans do you see on out there compared to Toyota/Subaru/Honda/etc? You know why? Shitty reputation. Transmission issues, class action lawsuits, etc. I'm looking to buy a car now and have a multiple friends who bought cars recently. None of use even looked at a Ford. We'll see if they can build their reputation in the EV space. (I assume they have a better reputation with pick up trucks)
- greedo 5y ago
  Ford dominates in trucks. The F-150 has been one of the best selling vehicles in North America for decades. And yes, Ford sedans suck, which is why Ford is focusing on Mustang (both the EV and the ICE) and SUVs.
eldaisfish 5y ago
people - especially on tech forums - have a tendency to underestimate the value of accumulated business knowledge. I'm glad you mentioned Ford and their electric pickup truck. Ford make a series of some of the most durable and best-selling pickup trucks the world over. Tesla, on the other hand, have zero experience building rugged vehicles and their teething troubles will be immense. Ford, meanwhile, have been building rugged vehicles for decades. I would argue Rivian's position is similar to Tesla's in that they don't have the level of know-how that Ford do. Despite all the justifications, i cannot see how Tesla's model will scale beyond developed markets.

onlyrealcuzzo 5y ago

Since Tesla is now the elephant in the room - it's possible Tesla is distorting the entire auto industry. Tesla was one of the 5 largest companies in the world - something an auto manufacturer hasn't been in almost 50 years. Tesla had BY FAR the highest P/E ratio for any company of that market cap (as a percentage of global wealth) in history. Tesla's revenue growth is not much bigger than Alphabet's or Apple's - and these are companies with orders of magnitude more revenue and profit. For the last 50-ish years - outside of a few small companies (Ferrari, etc) - auto manufacturing has been a pretty terrible business. Tesla people keep trying to say that Tesla is really an infrastructure play or an Internet company or a services companies or even a space company - but... currently it's not. And even if it became any of those things - even at it's current growth rate - its P/E to growth rate is still unbelievably high. I don't really care if GM and Ford and Rivian are now overvalued - and compared to them Tesla is undervalued. Auto manufacturing is not suddenly going to become the most profitable business in the world. People aren't going to suddenly start paying more for cars than housing. People aren't going to suddenly own 30 cars a piece. Tesla is never going to grow enough to be worth it's current market cap. But the market can stay irrational longer than you can stay solvent - and I wouldn't take a bet that Tesla crashes if my life depended on it.

enchiridion 5y ago
Tesla is not saying that it is a space or internet company, that is SpaceX.
runako 5y ago
> Tesla's revenue growth is not much bigger than Alphabet's or Apple's - and these are companies with orders of magnitude more revenue and profit. I'm not that big of a Tesla bull, but you have to remember that stocks trade on forward expectations. The trillion $+ market cap companies basically have saturated their primary markets. Microsoft is not likely to find another billion desktop PCs onto which to sell a US-priced Windows/Office suite anytime soon. By contrast, if you buy the Tesla story, they are really just getting started. > Auto manufacturing is not suddenly going to become the most profitable business in the world. I tend to agree with this. However, it's worth noting that Tesla's margin profile is significantly different than all legacy automakers. Their gross margin is ~30%, which is within striking distance of AMD's. And Tesla is still sub-scale for the auto industry. EVs are a different beast than traditional ICE vehicles, so margins will initially be better on EVs for all EV manufacturers.

deleted 5y ago

[deleted]

tdrdt 5y ago

Today companies are valued by how much money investers think they can make from buying stock.

propogandist 5y ago

you should disclose how much of the net revenue comes from selling tax credits. Telsa is not making money from vehicles yet from what I recall. Rivian will be a long way away from making money on tax credits.

panick21_ 5y ago
> Telsa is not making money from vehicles yet from what I recall. Are you a time traveler from 2015? Tesla is having industry leading margins. They are currently at almost 30% automotive margin.
- propogandist 5y ago
  I was remembering an article like the one below [1] on profitability. Looked through Q3 '21 results and it seems they're at ~29% margin, excluding tax credits now [1] https://www.cnbc.com/2020/07/23/teslas-sale-of-environmental-credits-help-drive-to-profitability.html https://www.cnbc.com/2020/07/23/teslas-sale-of-environmental...