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I've invested in GM and avoided investing in Tesla. Mostly just because I understand GM, their business and financials and stock price history makes sense to m

by bradfa 5y ago

I've invested in GM and avoided investing in Tesla. Mostly just because I understand GM, their business and financials and stock price history makes sense to me. I do not understand the valuations on Tesla, and hadn't even long before COVID and the most recent run-up in value. Clearly I've missed out on massive earnings if I had invested in Tesla instead of GM (although GM's done decently lately). To me looking at the stock pricing, Tesla looks like a software company where tremendous growth has been occurring and is expected to continue for some time. To some extent they are a software company, but that software so far has seemed to me to require quite an expensive set of hardware to be sold with it in order to get the software and continuing monthly/yearly/feature revenues sales. This has worked for Apple, so it's not unprecedented, but it'll be interesting to watch how long it can last. SpaceX makes more sense to me with having high valuations relative to revenues, it's a services company. The service is getting things to space and now also providing internet access. Tesla doesn't look like a software or services company to me, at least not yet. But maybe I'm looking at it wrong?

bradfa 5y ago
Possibly the reason I don't see Tesla as a services or software company is because I have very little faith that level 5 autonomous driving is going to be a thing in the near future. I could be very wrong, and if Tesla's existing hardware on the road can do it, then THAT would be a game changer and very easily justify the current stock price to me.
gitfan86 5y ago
Forget the stock price. Look at operating margins, operating leverage, delivery volume, trailing delivery volume growth, battery supply, dealership contracts.
- Thrymr 5y ago
  > Forget the stock price. Look at operating margins, operating leverage, delivery volume, trailing delivery volume growth, battery supply, dealership contracts. All of these things can be good and the company could be set up for profitability and success, and yet the stock price is _still_ overpriced.
  - gitfan86 5y ago
    GM stock is current priced as 2.7 Billion dollars per Electric Vehicle sold last quarter. TSLA stock is current priced as 2.7 Million dollars per Electric Vehicle Sold last quarter. TSLA is the "overpriced" stock?
    - bradfa 5y ago
      GM only sold a handful of EVs in the 4th quarter of 2021, I'll give you that. But in previous quarters they sold quite a lot more EVs than they did in the 4th quarter. This dismal 4th quarter EV sales statistic was partly due to supply constraints and partly due to the Bolt battery recall.
- fsckboy 5y ago
  > Look at operating margins, operating leverage, delivery volume, trailing delivery volume growth, battery supply, dealership contracts. and you think by looking at those you are going to notice some things that analysts in that market have not noticed and is actionable by you because you can tell the current stock price is not correct? Isn't the future performance of Tesla affected by the number of people in its target markets who can afford them? why didn't you look at population demographics?
  - gitfan86 5y ago
    Do you think Wall St. analysts have a history of being correct? Most are wrong more than they are right. This guy is pretty good, but he was late to the game. https://markets.businessinsider.com/news/stocks/here-s-why-morgan-stanley-bumped-up-tesla-s-price-target-by-33-1030894136 https://markets.businessinsider.com/news/stocks/here-s-why-m... This link shows the change in demand for EVs https://www.iea.org/data-and-statistics/charts/global-sales-and-sales-market-share-of-electric-cars-2010-2021 https://www.iea.org/data-and-statistics/charts/global-sales-...
    - kqr 5y ago
      The fact that our best performing models for the risk-neutral price of equities are unbiased random walks tell me that yes, in aggregate, Wall Street is really good at being correct.
sleepingadmin 5y ago
>I've invested in GM and avoided investing in Tesla. Mostly just because I understand GM, their business and financials and stock price history makes sense to me. I do not understand the valuations on Tesla, and hadn't even long before COVID and the most recent run-up in value. Clearly I've missed out on massive earnings if I had invested in Tesla instead of GM (although GM's done decently lately). I'm not currently invested in automotive. Just drive by some dealerships, empty lots. Not because they are selling out but because business is bad. There will be a work from home permanence, the inflation reality will destroy the automotive industry. The only thing keeping them barely afloat is low interest rates. Then you also have the market disruptor of Tesla. Ford and GM obviously have some fantastic products coming and even some already here. EV silverado and hummer are amazing. Mach-E and EV f150 are possibly the best. EV cars is a new generation of vehicle and will harm the existing auto industry. Ford and GM are obviously going to survive no problem. They arent worth a trillion $ because they are behind but have significant costs upcoming. GM and Ford's upcoming profitability is going to be quite poor. Stellantis looks like they are too far behind. Ram revolution silouette looks good but if the Chevy Bolt proves anything... building a good battery has many hurdles. Stellantis has nothing coming soon and may just die. >To me looking at the stock pricing, Tesla looks like a software company where tremendous growth has been occurring and is expected to continue for some time. To some extent they are a software company, but that software so far has seemed to me to require quite an expensive set of hardware to be sold with it in order to get the software and continuing monthly/yearly/feature revenues sales. This has worked for Apple, so it's not unprecedented, but it'll be interesting to watch how long it can last. Tesla's first disruption is that after the car leaves the lot. It continues to get better. The traditional auto industry, you leave the lot and your car will be that or worse forever. The second big disruption is efficiency. AC motors have regen, their motors are ~90% efficient. This creates the new generation of car. A model 3 performance(inexpensive sedan) has a 0-60 of 3.2 seconds. That's faster than all production Corvettes. Faster than a Hellcat. As fast as a Mclaren F1 from back in the day. About as fast as a Nissan GTR or Porsche 911. All the while not being annoying loud, far more practicality, and no emissions. The most recently disruption... Tesla is now the fastest car with the plaid edition. 0-60 of 2 seconds model s plaid means it's faster than the Demon. Faster than all hyper cars. Yet at significantly cheaper price point. The roadster coming with compressed air to make it faster? Ridiculous. By the time Ford/GM really get going, Tesla will not have sat around. They will have moved forward. This is why Tesla has a ridiculous valuation. They effectively are the only competitor in the auto industry for the next several years.

by bradfa 5y ago

bradfa 5y ago

Possibly the reason I don't see Tesla as a services or software company is because I have very little faith that level 5 autonomous driving is going to be a thing in the near future. I could be very wrong, and if Tesla's existing hardware on the road can do it, then THAT would be a game changer and very easily justify the current stock price to me.

gitfan86 5y ago

Forget the stock price. Look at operating margins, operating leverage, delivery volume, trailing delivery volume growth, battery supply, dealership contracts.

Thrymr 5y ago
> Forget the stock price. Look at operating margins, operating leverage, delivery volume, trailing delivery volume growth, battery supply, dealership contracts. All of these things can be good and the company could be set up for profitability and success, and yet the stock price is _still_ overpriced.
- gitfan86 5y ago
  GM stock is current priced as 2.7 Billion dollars per Electric Vehicle sold last quarter. TSLA stock is current priced as 2.7 Million dollars per Electric Vehicle Sold last quarter. TSLA is the "overpriced" stock?
  - bradfa 5y ago
    GM only sold a handful of EVs in the 4th quarter of 2021, I'll give you that. But in previous quarters they sold quite a lot more EVs than they did in the 4th quarter. This dismal 4th quarter EV sales statistic was partly due to supply constraints and partly due to the Bolt battery recall.
fsckboy 5y ago
> Look at operating margins, operating leverage, delivery volume, trailing delivery volume growth, battery supply, dealership contracts. and you think by looking at those you are going to notice some things that analysts in that market have not noticed and is actionable by you because you can tell the current stock price is not correct? Isn't the future performance of Tesla affected by the number of people in its target markets who can afford them? why didn't you look at population demographics?
- gitfan86 5y ago
  Do you think Wall St. analysts have a history of being correct? Most are wrong more than they are right. This guy is pretty good, but he was late to the game. https://markets.businessinsider.com/news/stocks/here-s-why-morgan-stanley-bumped-up-tesla-s-price-target-by-33-1030894136 https://markets.businessinsider.com/news/stocks/here-s-why-m... This link shows the change in demand for EVs https://www.iea.org/data-and-statistics/charts/global-sales-and-sales-market-share-of-electric-cars-2010-2021 https://www.iea.org/data-and-statistics/charts/global-sales-...
  - kqr 5y ago
    The fact that our best performing models for the risk-neutral price of equities are unbiased random walks tell me that yes, in aggregate, Wall Street is really good at being correct.

sleepingadmin 5y ago

>I've invested in GM and avoided investing in Tesla. Mostly just because I understand GM, their business and financials and stock price history makes sense to me. I do not understand the valuations on Tesla, and hadn't even long before COVID and the most recent run-up in value. Clearly I've missed out on massive earnings if I had invested in Tesla instead of GM (although GM's done decently lately). I'm not currently invested in automotive. Just drive by some dealerships, empty lots. Not because they are selling out but because business is bad. There will be a work from home permanence, the inflation reality will destroy the automotive industry. The only thing keeping them barely afloat is low interest rates. Then you also have the market disruptor of Tesla. Ford and GM obviously have some fantastic products coming and even some already here. EV silverado and hummer are amazing. Mach-E and EV f150 are possibly the best. EV cars is a new generation of vehicle and will harm the existing auto industry. Ford and GM are obviously going to survive no problem. They arent worth a trillion $ because they are behind but have significant costs upcoming. GM and Ford's upcoming profitability is going to be quite poor. Stellantis looks like they are too far behind. Ram revolution silouette looks good but if the Chevy Bolt proves anything... building a good battery has many hurdles. Stellantis has nothing coming soon and may just die. >To me looking at the stock pricing, Tesla looks like a software company where tremendous growth has been occurring and is expected to continue for some time. To some extent they are a software company, but that software so far has seemed to me to require quite an expensive set of hardware to be sold with it in order to get the software and continuing monthly/yearly/feature revenues sales. This has worked for Apple, so it's not unprecedented, but it'll be interesting to watch how long it can last. Tesla's first disruption is that after the car leaves the lot. It continues to get better. The traditional auto industry, you leave the lot and your car will be that or worse forever. The second big disruption is efficiency. AC motors have regen, their motors are ~90% efficient. This creates the new generation of car. A model 3 performance(inexpensive sedan) has a 0-60 of 3.2 seconds. That's faster than all production Corvettes. Faster than a Hellcat. As fast as a Mclaren F1 from back in the day. About as fast as a Nissan GTR or Porsche 911. All the while not being annoying loud, far more practicality, and no emissions. The most recently disruption... Tesla is now the fastest car with the plaid edition. 0-60 of 2 seconds model s plaid means it's faster than the Demon. Faster than all hyper cars. Yet at significantly cheaper price point. The roadster coming with compressed air to make it faster? Ridiculous. By the time Ford/GM really get going, Tesla will not have sat around. They will have moved forward. This is why Tesla has a ridiculous valuation. They effectively are the only competitor in the auto industry for the next several years.