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Ask HN: Why is Tesla stock dropping? Meta?

25 points by rblion 4y ago

To me, it is surreal to see what I thought were invincible companies with adamantium founders 'facing the music'. I honestly don't understand too much about market valuations beyond a general idea. A good explanation would be much appreciated if anyone has one.

pifm_guy 4y ago
Is it possible that there are just some big market players doing some gradual slow sells? And there aren't many buyers on the other side, so prices are pushed down.
- dave4420 4y ago
  Certainly Musk has been selling a lot of his Tesla shares.
5350-uiop-1130 4y ago
Because we've now entered the dump phase in the pump and dump cycle.
arkitaip 4y ago
When Musk attacks "liberals" and "leftists" he is attacking many of his potential customers. He is also very loud about his right-wing politics and has become so divisive that people don't want to be associated with the Tesla brand.
- rblion 4y ago
  He seems to be going through a similar phase as Kanye West, gotten so big that he believes his own myth and surrounds himself with yes men. Both have flown too close to the sun it seems, like Icarus. Him stepping down from Twitter is probably to save Tesla's stock but like you said, the damage to the brand may be long-lasting. At the same time, EVs are becoming more mainstream in general as other brands catch up.
  - ModernMech 4y ago
    Musk is not stepping down, he’s trying to get around the results of a poll that he lost but said would abide. He said he’ll step down when he’s found someone qualified to replace him. That will either be “never” or “a sock puppet”. He’s already putting ridiculous constraints on the position, that the new CEO must invest their life savings in Twitter to get the job. Hard to tell if he’s serious about that or not because it’s very far from the craziest thing he’s said lately.
- sn0w_crash 4y ago
  He’s also attracting a ton of right wingers who never would have bought a Tesla. I wonder if there’s a strategy there
  - vaidhy 4y ago
    I am probably stereotyping here.. but the kind of people who get attracted to the right wing conspiracy theories tends to be more rural, non-college educated middle aged white men (and women) who also are likely to come from more rural parts of the country. I do not think the audience for Tesla is there. You need density to build charging infra. You need most of your trips to be short-distance away and your use mostly commuting. While they might feel happy about elon and kanye sticking it to the other side, they are not in market for an EV.
    - ModernMech 4y ago
      You are stereotyping. The Jan 6 insurrection was perpetrated in large part by doctors, lawyers, state legislators, United States congresspeople, business executives, etc. The head of the oath keepers, who was convicted of seditious conspiracy, is a Yale educated lawyer. It wasn’t the uneducated who were sending fake Certificates of the Vote to the VP. They were practicing lawyers and elected representatives of the government. The wife of a SCOTUS Justice is one of the biggest proponents of right wing conspiracy theories. It doesn’t get more elite than that.
  - synu 4y ago
    Of the people who love culture wars and hate liberals, and yet at the same time also believe in climate change and want to buy an electric vehicle, aren’t they much more likely to buy the new electric f150? In general this combination of beliefs seems like too small of a segment to build a company with a market cap like Tesla’s around.
    - wikfwikf 4y ago
      You don't have to believe in climate change to buy an electric vehicle. You might believe in energy independence, or you might just think it's going to work out cheaper.
- refurb 4y ago
  I think you're confusing social media attitudes with the general population. I go back home and most people I know don't even use Twitter or even know much about Musk beyond his name.
GianFabien 4y ago
I have no doubts there are many investors who are unimpressed with Elon's and Mark's excursions into their fantastical worlds. There is no lack of hubris on their part. As interest rates rise, it becomes appealing to cash out of speculative investments and re-invest where returns are reliable and predictable.
- spiffistan 4y ago
  This is the reason. Institutional investors (which hold the lions share) are more wary of stocks with astronomical P/E ratios when the macroeconomical forecasts are what they are today. Expect the bloodbath to continue until there is a semblance of calm waters on the horizon. I'm thinking around March.
  - sshine 4y ago
    Surely this accounts for some of the crypto winter, too. Not as many big institutional investors in crypto, but big investors have the same incentives, no?
sevensven 4y ago
More sellers than buyers, or sellers are more certain of their positions than buyers. Why? 1 - smaller number of registrations in China than expected. Is it because covid is ravaging and there are less people buying cars? BYD not seeing this effect, so indicates softer demand for Tesla in China 2 - increased output finally matching the demand? either because China has more internal competition or because the Fed increasing rates makes cars less affordable in the US 3 - hodlers of TSLA (overlap with hodlers of crypto) and option traders are getting margin calls with the decreasing stock price (their collateral for the margin) and are forced to sell at the current price 4 - Elon Musk sold TSLA stock to have money to shore up is Twitter acquisition ("found" that Twitter had 3B yearly negative cash flow) 5 - higher interest rates in US cause Price/Earnings compression, no need to risk on the stock market when treasuries offer a nice, guaranteed payout 6 - US economy is in recession and with a high interest rate; market participants will short stocks, specially the ones with higher P/E; its a self-powering process until it ends 7 - Musk political views on twitter (or lack of independence) tarnished the halo of the Tesla brand and may reduce the overall addressable market of the brand, specially in the US. Tesla was always a Mass Stream Media magnet but now common folks and journalists are exposed to more "radical" views from Musk, eroding trust. 8 - Tesla price reductions and free charging miles in push to reach end-of-quarter numbers, because customers could be delaying purchases until next year to benefit from Inflation Reduction Act tax credits. This will lower profit margin on these sales and, therefore, total profit for the quarter (although Tesla is producing more cars, with scale effects on the margin and the supply chain prices are starting to decrease) 9 - too much noise regarding Musk attention to Twitter. Is he still taking enough time to drive the Tesla business ? I had to sell the most my TSLA stock to prevent margin calls (greed selling puts at All Time Highs and thought the rising Tesla business would outdo the Fed tightening - was totally wrong). Would not have sold any if not for this. Looking forward to shove some extra money again back into TSLA, as it becomes available.
- seper8 4y ago
  >higher P/E Putting that very mildly... More like nosebleed P/E
  - rapsey 4y ago
psychstudio 4y ago
It's the market. Tesla is way overpriced. Now that the market is contacting, money is moving to value instead of speculation.
- Gigachad 4y ago
  This is gonna be bad for crypto
  - sshine 4y ago
    It already is. Even a fractional reserve exchange that’s “doing ok” (whatever that means when you play with other people’s money) is still gonna buckle under the weight of a run.
mensetmanusman 4y ago
All tech stocks were pumped by free money from the fed. Now they are at a reasonable level.
bigbillheck 4y ago
> adamantium founders Musk is a Tesla founder only retroactively.
- rapsey 4y ago
  When he came along it was nothing more than an idea and a name. Of all the things you can speak negatively about Musk this is the weakest.
  - croes 4y ago
    That still makes him only an investor and not a founder.
xrayarx 4y ago
I‘d say it is still a buy recommendation https://money.cnn.com/quote/forecast/forecast.html?symb=TSLA https://money.cnn.com/quote/forecast/forecast.html?symb=TSLA I‘m not an expert, but probably down because Mr Musk has been selling quite a lot of stock this year and also again this month, apparently because of Twitter. https://www.cnbc.com/2022/12/15/elon-musk-sells-another-huge-chunk-of-tesla-shares-.html https://www.cnbc.com/2022/12/15/elon-musk-sells-another-huge...
snowpid 4y ago
Ive heard in a German startup podcast, that the biggest owner of Tesla currently reduces his share on Tesla. His name: Elon Musk.
smt88 4y ago
Market valuations are essentially meaningless and have been wildly inflates due to low interest rates. Tesla was never worth its peak market cap.
kqr 4y ago
It might be obvious to you already, but saying it anyway just in case: every single explanation you get here, however nice of a story it sounds like to you, is pure speculation. If a HN contributor actually could explain market movements, i.e. really grokked the causal network underlying equity prices, then they would make millions exploiting the ignorance of everyone else, and probably not sharing their secrets with the rest of the world.
- hansvm 4y ago
  Is that necessarily true? Is it not possible to use the extra information you have with hindsight to construct correct causal narratives and simultaneously also not be able to use such techniques to predict the future because you wouldn't have the requisite information?
  - kqr 4y ago
    This is a difficult epistemological argument that it took me some time to accept, but: how can you confirm the explanation is correct, if not by testing it as a hypothesis, i.e. using it to predict unknown (future) outcomes? Put differently, if you say "X causes Y, but only in this one instance we're discussing now and not in the future" then does X really cause Y, or was it a coincidence that they happened at the same time this once? The razor leads us to conclude that what's indistinguishable from coincidence is coincidence. ---- Edit: Oh, I see what you're saying! Something like "X causes Y but knowledge about X is only available after Y is already known"? That is possible, and it's even testable by blinding the person to Y while revealing X. Is it useful knowledge? Maybe!
ajaimk 4y ago
Let me explain it like you are a (very smart) 5 year old. Prices go up when more people want to buy something than sell it. They go down when more people want to sell than buy. With Tesla, more people want to sell than buy for a multitude of reasons: cashing out on the 2020-2021 rally (20x), seeing it as over valued in 2022 or just seeing Elon not paying enough attention to Tesla. With Meta, people are selling cause we’re in a recession and Ad spending goes down hard in recessions. Additionally, you have Mark burning money on the Metaverse which no one thinks is a good idea (he’s not selling anyone his vision on the metaverse but since he controls the company with more than 50% of the voting shares, he can do what ever he wants). Long story short, investors have lost confidence in these stocks.
- 4RealFreedom 4y ago
  What about Nvidia, Apple, and Google? Those are all down. Did people lose confidence in those? The market reflects the state of the economy.
checkyoursudo 4y ago
Can we know for sure? Probably not. Here are my guesses. Tesla 1) $TSLA was overvalued based on unrealistic assumptions about competitors and Tesla's ability to stay on top. 2) $TSLA was sort of a meme-stock that has just run out of comedy runway. 3) $TSLA is now a meme-stock and ordinary investors don't generally want to hold meme-stocks. 4) Investors are genuinely concerned about the behavior of the Twitter CEO, who as we all know is the Tesla CEO. Is it really surprising that making bad decisions in one arena will affect outcomes in another? I have no idea which if any of these are true, but they all seem somewhat plausible. Really, each of these plus more are probably contributory factors for different investors. Meta 1) Social media as a profitable enterprise has not especially proven durable over the long term. Plenty of entrenched incumbents in all sorts of industries fail after decades or centuries even. Meta is running out of good ideas. (Again, just my guess.)
- IshKebab 4y ago
  Also Facebook completely blew its original "what are my friends doing?" market. Very few people use it for that anymore. It still has some value - Groups and Marketplace are pretty popular, and a decent number of businesses use it as their website. But it doesn't really have the "all my friends use Facebook" moat anymore. That's moved to Whatsapp (at least in the UK). (And yeah Meta own's Whatsapp too, but Whatsapp is not really monetised at all.)
  - rajman187 4y ago
    Well it’s not entirely accurate to say few people use it for that anymore. It has 2.9 billion monthly active users on the platform, so even a fraction there for “what are my friends doing” is more than the population of most countries. I think it’s just limited to demographics not overall represented on HN, for instance WhatsApp monetization comes through the business offerings. Increasingly, you can use that to interact with companies, small and large
    - IshKebab 4y ago
      > WhatsApp monetization comes through the business offerings. Increasingly, you can use that to interact with companies, small and large Yeah I know that's their plan (basically trying to copy WeChat) but does anyone actually use it? I haven't heard of a single business in the UK using it yet.
blippage 4y ago
According to Yahoo Finance, TSLA is on a PE of 38 and a market cap of nearly $400b. High PEs are only warranted by high growth, which is difficult for a large company to achieve. The narrative over the last few years is that tech stock will grow to the sky. We were in an ebullient bubble phase. Psychology is a factor in market pricing. The narrative is shifting. Interest rates are going up, the economy is tightening, people may lose their jobs and investors are realising that companies in high valuations leave precious hostages to fortunes. People are beginning to realise that TSLA doesn't have a monopoly on the production of electric vehicles. Above-average profits bring in competitors, which of course reduces those supernormal profits due to market forces. People go from "this baby's going to the moon" to "I don't want to be the last guy holding the bag." They'll be plenty of experienced investors on HN who know exactly how all this goes down. But they'll also be a surprising percentage of HN readers who won't. Despite being highly intelligent, they'll fall for narratives (perhaps even more so than their lesser intelligent counterparts), and rationalise why absurd valuations are justified. Falls tend not to be kind, either. It can take years to build up a head of steam, only for it to collapse in a few months. Crypto, anyone? Rising prices tend to feed on themselves. The higher and longer a stock goes up, the more it seems like a "sure thing". But there's no such thing as a sure thing. The higher it goes, the more detached it becomes from reality. Reality wins in the end, though.
- c7b 4y ago
  This. The better question is probably not why are those companies' stocks falling now, but why did they go so high before? Tesla still has an MCAP of around 400bn - for comparison, Volkswagen has around 70bn.
  - Amezarak 4y ago
    Yeah, the stock market is one of those things I've convinced myself there isn't much point in trying to understand. I believe I could pick out different facts and construct narratives, but they would probably all be wrong. Legions of extremely smart people believe they understand the stock market and get it wrong all the time. What are my chances? Tesla is one of those things that cemented it for me. Tesla's market valuation - at least in my eyes - was insane. People would tell me "it's about where Tesla COULD go", but Tesla would literally have to have sold something like as many cars as the five biggest manufacturers combined, and they have very little actual moat. Why was Tesla's stock so high? Because it was. Why is it lower now? Because it is. If you can figure out the real reason why, you can probably predict where it's going next, in which case, congratulations on your future wealth.
317070 4y ago
You can see the price of a share (if the market is efficient) as the sum of the future discounted economic production. The issue here is the discount. When the FED is changing the interest rates up, that means the discount rates of market players go down. A safer alternative investment has become available. So economic production in the further future is worth less today than it was last year. For which companies does that really matter? For companies where a large part of their value came from economic productivity that they were expected to have further in the future, and have relatively little of their value coming from present economic production. Tesla and Meta are two such companies, but it is a tendency in tech to believe companies will grow.
alexanderfrey82 4y ago
Tesla 3 owner here and currently holding Tesla stock - I think the times when Tesla had the only electric car option in the market are over. Many other great companies like VOW (https://markets.sh/symbols/XETRA:VOW https://markets.sh/symbols/XETRA:VOW) also exist and build fantastic cars(Audi GT). Have you seen the latest BMW electric cars ? I think a correction in TSLA valuation was overdue…
andrepd 4y ago
Why did it go up? Certainly not on fundamentals. Why did it go down now? Nobody knows either. It's a chaotic system with often only a thin connection to real world value.
meltyness 4y ago
On Tesla, that's easy, relative valuation[1]. I called this level in October[0] It's no longer being priced as a miracle-maker, FSD, semis, scale, superchargers, powerwall. The government isn't buying it[2], Tesla isn't outfitting PG&E/ERCOT flaming infrastructure with batteries to prevent people from freezing to death. They're not really F+HON+XOM+Xylinx+X-Parc, and loud activists want them to just be F. Now the real question: does "making a car" really still look like an appealing growth tactic for Tim Apple to deliver shareholder return?[3] Knowing all this makes me want to gouge my eyes out, unfortunately. They'll obviously pull through with their lowish debts, I think Musk is more aware of the gems in their mine than he lets on. [0] https://news.ycombinator.com/item?id=33211504 https://news.ycombinator.com/item?id=33211504 [1] https://traffic.megaphone.fm/WSJ9258707464.mp3?updated=1641605508 https://traffic.megaphone.fm/WSJ9258707464.mp3?updated=16416... [2] https://oshkoshdefense.com/usps-selects-oshkosh-defense-for-next-generation-delivery-vehicle-fleet/ https://oshkoshdefense.com/usps-selects-oshkosh-defense-for-... [3] https://www.cnbc.com/2021/04/05/tim-cook-interview-apples-car-plans-and-thoughts-on-elon-musk.html https://www.cnbc.com/2021/04/05/tim-cook-interview-apples-ca...
retskrad 4y ago
Elon Musk is this generations Steve Jobs. Like Jobs before him, Elon is a megalomaniac and has a huge ego. However, that doesn’t take away the fact that he single-handedly pushed society towards electric vehicles, just like Jobs did when Apple changed the smartphone with iPhone.
- wikfwikf 4y ago
  Do you really think that Elon Musk's contribution to electric vehicles is comparable to Jobs' contribution to smartphones? Steve Jobs worked on personal computers before they existed. He was recognized as a visionary with his first iconic device, the Apple II, and he make a huge impact on computing with the Mackintosh which came out in 1984. The list of ground-breaking devices which he worked on is longer than anyone else's. Almost everything he did between the days of solder-yourself computers and the point when everyone had a camera/internet/voice/video/touchscreen-enabled device in their pocket was pushing towards making personal computing and networked communication easier, more user-friendly, better designed, more reliable, etc.
hericium 4y ago
TSLA overvaluation is based on the FSD myth which more investors stops believing in.
IgorPartola 4y ago
Tesla is valued at nearly 2x that of Toyota and nearly 10x that of Ford, while struggling to produce a fraction of the cars. It is valued on the idea of growth but it has proven that growth isn’t happening. Also economic downturn. Also other manufacturers are introducing more sensible electric vehicles than they used to. Also Tesla has repeatedly had issues with build quality. It’s starting to catch up with them. Tesla is the My Space of electric cars. It’s necessary to get us over the hump but has no staying power of its own. Meta has a huge generational problem. Their flagship products are Facebook and Instagram. Facebook is not used by gen Z at all. The writing is on the wall that FB will be a ghost town once millennials turn into ghosts. Instagram is maybe 10 years behind. So Meta is chasing TikTok without realizing that gen Z isn’t using that either and also without realizing what TikTok actually is. Also Meta is bizarrely chasing virtual reality stuff and failing so far to provide any kind of value prop.
- jerrytsai 4y ago
  Like with anything publicly traded, the price of a share is principally derived from belief. Much of this belief comes from a person projecting where the price will be in the future. With Tesla, many people and institutions projected that that price would increase in the future. Now many of them do not. Belief in the direction of the price can come from examining the financial fundamentals of a company and the perceived value that it may increasingly generate ("fundamental analysis'). Or it can be speculative, where people believe other people will buy (or sell) more based on observed buying/selling activity ("technical analysis"). With Tesla, many investors were using their own version of technical analysis that far surpassed the valuation that a reasonable fundamental analysis would have derived and even derive today. There was and is a mania, much like there has been and there is for many forms of cryptocurrency. The recently declining price is likely due to a collective perception that Tesla has been overpriced and, due to recent factors, that the fundamentals that justify the pricing for a share will diverge even further from its recent pricing. From a fundamental level, Tesla was unlikely to justify its recent pricing. An irony is that the earlier mania was so intense even today, after such a pronounced plunge from the start of the year, it likely remains seriously overvalued.
- paulcole 4y ago
geeB 4y ago
Probably nobody knows for sure. I can say why I’m not bullish but it’s just a post hoc rationalization. Tesla: general economic environment, stiffer competition and too many things piling up that will come “next year”, which will dry up one of their historical advantages (i.e. get paid now, deliver never). Probably some sell pressures from Musk cashing out for twitter and from a certain demographics of investors hit particularly this past year. On top of all that, Musk has been in the media too much and his true self started showing, alienating mostly potential customers and not making much inroads with the more conservative folks. Meta: that just seems the nature of the space. Products are in and out within a few years, retaining mostly a certain demographic which grew up with them. They were able to stay relevant via good acquisitions, but were not able to do so for a couple of cycles now due to competition not interested in selling (Snapchat, TikTok). To accelerate the decline: general economic environment, privacy restrictions, and an expensive pivot to VR where the market seems way too small to support such valuations.
lordnacho 4y ago
It's interest rates. They're coming back to something more ordinary now. Keep in mind most investors are agents. They want to be able to tell their customers "look you're paying for a service I'm providing you". When rates are zero, customers are gonna think "hmm that Bob guy is giving me nothing, plus I'm paying him". So what does Bob do? Take some risk. A tiny amount of risk is actually enough that the customer is not net paying Bob, because fees aren't that high in relation to market moves. What does Bob do? Sticks his investors' money in stuff that has a good story: growth stocks. All the Bobs do this, and TSLA and META go up. Now the story behind such firms is often the same under the hood: they're making some revenues now, but next year it will be more and the year after it will be a lot more, and maybe profits will rocket and it will be great if you got in early. Which is fine when interest rates are zero, you're basically just backing a maybe-success that others are also backing. Those companies are often also earning money from other growth firms, so it feeds itself. But when rates go to say 5%? Then in 5 years time, you could have just sat on your butt, not cared at all about what some CEO is writing on Twitter, and just collect a compounded dozens of percent. And it starts to bother you that the story could unwind the other way: those firms will lose money because their customers are in the same game, and the Bob guy certainly does not want to lose money, so he's going to be wise and sells a bit.
mcarmichael 4y ago
For Tesla in particular, an explanation for the incredible rise in stock price post-2019 is needed, to inform any explanation for the recent slide. In the last 2 years, Meta touched twice its end-of-2019 price; Tesla peaked at over 13 times its end-of-2019 price, and is still 5 times higher now! That seems like a far more striking and unlikely phenomenon than the recent slide.
jesuslop 4y ago
Another idea uses valuation concepts. To valuate today you set up a lookahead window of say 10 years, and you sum future discounted cash flows, so sum year-x money discounted to actual-year time value of money [1], that depends on money, time, and interes rate (and sum also a terminal value). So even if cash flows projections stay similar, a discretionary upping in %5 in interests rates in a year that lingers undefinitely impact down valuations which should draw prices down (note though that this reasoning applies to all companies, not just some faang) [1] https://www.investopedia.com/terms/t/timevalueofmoney.asp https://www.investopedia.com/terms/t/timevalueofmoney.asp
beardyw 4y ago
TLDR Just because everyone bets on a horse it doesn't mean it will win.
PaulHoule 4y ago
Stocks tend to move together. The S&P index is down 20% for the year. See https://en.wikipedia.org/wiki/Beta_(finance) https://en.wikipedia.org/wiki/Beta_(finance) Those stocks may have their own problems but they are all taking a hit from rising interest rates and other factors that have people running away from stocks as a whole.
- 4RealFreedom 4y ago
  This is the real reason. All Stocks are down. Why pick Facebook and Meta?
  - ModernMech 4y ago
    Because fb (and Tesla) are underperforming the indexes by a lot -- they're both down ~65% YTD.
jmisavage 4y ago
I’m surprised nobody here has mention the end of year discounts they just started offering in various countries. Discounts like this are used to increase demand something Tesla hasn’t had to do in a long while. To the market that signals weakness. If it was localized to the US you could rationalize it that too many people are waiting until the new year when the new EV rebate kicks in, but they’re also doing the same thing in China, Mexico, and Canada.
Zufriedenheit 4y ago
At its peak Tesla was valued more then the worlds nine largest car companies combined. This high stock price was mostly driven by retail investors. It became a kind of meme stock like GME or cryptocurrencies, whose value was not based on economic prediction but mostly hype and stories. A large part of institutional investors actually did bet against the stock. Tesla profited from that high valuation by selling extra stock to build up a nice cash buffer, this diluted the holdings of investors. Also Mr. Musk has sold some of his stock into the market. But more importantly the retail investor hype has died down now when people have to be more careful with their money because general economic outlook has tightened and stimulus checks have stopped. I think the Tesla stock price coming down to a more realistic level is actually a healthy thing for the company and the market in general. Meta i think reported the first period without user growth. The stock was still valued with an expectation of continued growth, so people now realized that their might be an end to that soon.
rsynnott 4y ago
Beyond everything else, I think that the Twitter thing has _really_ damaged Musk’s public image. Before Twitter, a pretty common mainstream view of Musk was that he was an, albeit eccentric, magical genius. The signs of trouble were there, of course, but the general public gravitated towards the Tony Stark interpretation. That has now changed _dramatically_. Very few people now think of Musk as being a magical genius.
bryanlarsen 4y ago
Tesla is massively underpriced for a stock growing its top line at 50% per year and its bottom line growing at 80% a year. Tesla is massively overpriced for a stock that's not growing. The stock market used to be saying that Tesla would continue growing at current rates for about 5 years. The stock market is now saying that Tesla will grow at current rates for less than 2 years. Obviously it can't continue growing at current rates indefinitely. So when will it stop? If you think it'll keep growing for more than 2 years, it's a buy. If you think it'll stop growing sooner, it's a sell. Tesla has started lowering prices on its cars. People think that's a sign that their growth is slowing.
- meltyness 4y ago
  bang-bang valuation is a total yikes honestly.
huijzer 4y ago
Because the price made no sense: https://news.ycombinator.com/item?id=30681223#30684099 https://news.ycombinator.com/item?id=30681223#30684099
deleted 4y ago
[deleted]

a_bonobo 4y ago

>4) Investors are genuinely concerned about the behavior of the Twitter CEO, who as we all know is the Tesla CEO. Is it really surprising that making bad decisions in one arena will affect outcomes in another? Is he even doing any work as the Tesla CEO? He seems to be busy tweeting 24/7

xiphias2 4y ago
I'm not a Tesla investor, but when the CEO tweeted that ,,Tesla can take care of itself'', that sounded scary. He made a $44B deal in Twitter, and he can't accept the repricing in the market that makes it worth significantly less. He owns 13% of Tesla, which is worth $50B. For him these two companies look like equal importance, while for investors Tesla is the important company.
- willnonya 4y ago
  I think this perspective is born of ignorance. A mature company doesn't rely on interactions of the ceo in day to day operations. If the right people are in place those will take care of themselves. The ceo value comes in from the strategic and big picture elements. Twitter will eventually get to this place too. The risk to both Tesla a d SpaceX is where Musk as as much as lead engineer as CEO. Distracting him from that side is where there is likely to be an impact.
  - fragmede 4y ago
    Normally, yes, but for an iconoclast like Musk, in addition to having to handle helicopter CEO-ing that takes careful management by specialized teams at both SpaceX and Tesla, there's also the unknown amount of Tesla and SpaceX engineering time that's been spent on Twitter instead. Depending on your opinions of FSD though it might be a good thing. With the rest of the auto industry finally getting into EVs, I'm sure there are strategic and big picture elements that are going unnoticed by the absentee CEO.
  - ModernMech 4y ago
    Sounds like an argument for making CEO a part time position. If Musk can be CEO of 3 companies at once and still tweet 24/7, the role of CEO seems pretty light. Like, if my day-to-day duties are so light that I can take a similar full time job at 2 other companies, and everyone gets on fine while I’m gone doing those other jobs, maybe that’s an indication I’m not really doing anything important in the first place.
    - PaulHoule 4y ago
      A lot is going to depend on how much they can delegate. If Musk trusts other people to do the work at Tesla and SpaceX he can focus his attention elsewhere.
      - ModernMech 4y ago
        Imagine if it were acceptable for me to delegate my job to my underlings, and then use the freed time to draw a salary at another company. How come only CEOs get to do that?
        rizzaxc 4y ago
        this is like saying why does rich people get to have their own maids and butlers so they never have to do any housework, and effectively double their time in a day. at the end of the day, everyone has a boss and Elon's is the general public. his stock is tanking. while you can say it's not the same as being fired as a regular employee (and it's not), he doesn't 'get to do that'

hansfilipelo 4y ago
but Tesla would literally have to have sold something like as many cars as the five biggest manufacturers combined Just to give some nuance to the high evaluation of Tesla - Tesla does produce around 10 times as many _electric_ cars as, what I think are their two biggest rivals globally, Hyundai Motor Group (KIA+Hyundai) and Volkswagen Group does. Tesla has also consistently been outpacing both in how much their production capacity of electric vehicles grows year-over-year. I think the evaluation dip of Tesla is very much related to: 1. Current state of general economy. 2. Investors realizing how absolutely bonkers its CEO is and his total lack of empathy for others than himself and his own ego. 3. Elon selling a lot of stock to finance his Twitter shitstorm.
- ModernMech 4y ago
  At the same time, not living in a place where every other car is a Tesla (as seems to be the case when I visited San Diego recently) to the extent that I see electric cars they are VW and Kia. Teslas are very rare to see. We don’t have the same charging infra as other places so electric cars aren’t common at all; we just got our first charger at our first grocery store. But as that came, some people thought they’d want an electric car, and they didn’t turn to Tesla. If this trend continues and is representative of what’s happening elsewhere, that’s bad for Tesla.
  - hansfilipelo 4y ago
    But as that came, some people thought they’d want an electric car, and they didn’t turn to Tesla. This seems mostly like anecdotal. Note that all three big players (Hyundai, VW and Tesla) sells all cars they are currently producing, and have people in line for future cars (disclaimer: We ordered an Ioniq 5 2023 as soon as orders opened up early 2022, haven't gotten it yet). The difference is Telsa sells 10x as many cars that they produce at a lower cost (same price, smaller battery). As an example, while traditionally being cheaper - nowadays an Ioniq 5 is about as expensive as a Model Y (at least in Sweden where I live) due to Hyundai not being able to keep up with the demand. They simply can't produce the same number of cars Telsa can. Telsa are able to sell more cars at a higher price point. They can do so due to their bigger production, superior software, charging network and efficiency of the drivetrain. Given that demand would decrease for EVs in general, Telsa has a way bigger margin to decrease prices than VW or Hyundai. Their product is just better - full stop. This comes from someone who thinks Elon is an absolute idiot, has ordered a non-Tesla EV and absolutely hates the driver experience in the Model Y/3 (no buttons/switches, no instruments in front). I think neglecting what Tesla has accomplished so far and that the position they are in reflects on their market value is just lack of knowledge into how many EVs Tesla produces compared to anyone else.
    - Amezarak 4y ago
      I am perfectly willing to believe it’s possible that Tesla will be the dominant auto manufacturer someday. I doubt it, but I could believe it. But Tesla’s market cap of 1.2 trillion was that of a company that would have a near-monopoly in the entire auto industry worldwide. I don’t see how Tesla’s EV market share justified Tesla’s market cap. I just went back and looked and Tesla’s market cap was higher than every single auto manufacturer combined. Could anyone really justify that based on expectations of future performance? Even now it’s about the same as the top four or five combined. I struggle to see how that’s not a crazy overvaluation. But I am not going to put any money on it. Even if I’m right, the market can stay irrational longer than I can stay solvent.
      - hansfilipelo 4y ago
        You are comparing market cap to auto makers that all have a pretty bleak future - unless it's one of those with strong presence in the EV space. Remember that no new ICE cars will be allowed to be sold within the European Union starting 2035.
        Amezarak 4y ago
        Is there some reason to believe auto makers will be totally unable to shift to EV? Particularly when most of them already have EVs? I also checked the stats, and it doesn't seem like the market cap of other auto makers have dropped because of Tesla. They're all over the map but generally trending positive, going back 12 years, which as far back as this site lets me go. I agree they aren't selling a lot of EVs...but I also think a lot of that is just that EV demand is just not that high outside of certain bubbles, and certainly not at the current price point. Teslas, even Model 3s, are priced as luxury cars (I can't afford one myself), and have cachet among a certain set. Most EVs are worse off, in that they don't have the Tesla glamour. But there's no reason I can imagine that situation is permanent. When/if demand changes due to regulation or economics or evolving tech, it's going to be a very different environment. This is particularly true as batteries become commodities. I don't want to handwave away the engineering, but electric motors are not revolutionary technology. Even if we assume Tesla comes out on top, it seems crazy to believe Tesla is going to come out on top so hard that it sells 95% of all new vehicles globally. NB: I think the auto industry future is very bleak for other reasons: we could make a great, reliable electric vehicle, but instead we're packing them full of shoddy electronics and software that will have unpredictable and difficult-to-troubleshoot failure modes (as is already the trend in ICE cars, where electronics are a bigger and bigger problem.) They will end up having to be serviced by manufacturers only and we'll probably all be cursed with subscription plans. Life will me much harder for those less well off.
blippage 4y ago
Well, as the saying goes: great doubts, great wisdom; small doubts, small wisdom. (That's supposed to be a compliment, BTW). There's a great deal of uncertainty in investing, but that doesn't mean it's not something worthwhile. You have to remember that you will get a lot wrong. That's the nature of the game. The trick is to get it more right than wrong. Early success is not much of a predictor either. In fact, it often breeds overconfidence. Try to avoid hype stocks. It's easy to get burned. Recommended reading is "Intelligent Investor" by Ben Graham. Warren Buffett calls it the best book on investing ever written, so you can't go far wrong. It's importance is in emphasising valuation rather than narratives.

tjansen 4y ago

> chasing TikTok without realizing that gen Z isn’t using that either So what is Gen Z using?

danaris 4y ago
While I'm not sure I agree with the GP's premise... ...Gen Z doesn't have to be "using" anything particular. Just because, for some years, "everybody had to be on Facebook" doesn't mean that the decline of that means something will necessarily replace it. There was no "previous Facebook", and there doesn't have to be a "next Facebook".
- 4RealFreedom 4y ago
  IgorPartola mentioned MySpace. When Facebook came out, I wondered why anyone would make a MySpace clone. I think there's an argument that there was a previous Facebook.
  - evanelias 4y ago
    Absolutely yes regarding MySpace. Per Wikipedia: "in June 2006, it surpassed Yahoo! and Google to become the most visited website in the United States" https://en.wikipedia.org/wiki/Myspace https://en.wikipedia.org/wiki/Myspace
- igetspam 4y ago
  There were a half a dozen or more "previous Facebook." MySpace, Friendster, LiveJournal, DeadJournal, etc. There were so many during the MySpace era that I've forgotten most and barely recall the bigger ones. There will be a replacement but hopefully it will look different.
  - danaris 4y ago
    Hah, should've known I could count on HN to be super pedantic about offhand statements like that... MySpace was founded in 2003, Facebook in 2004. Yes, there was a brief period where MySpace was more "the place to be" than Facebook, but that was essentially a flash in the pan, given that Facebook has held that crown now for so many people for over a decade. To expand a bit on what I said in the GP post: In 2002-4, the early social networks all started to come online. Facebook was the only one of those to survive with any relevance. It has now existed for 18 years, and its relevance among young people is definitely on the wane. There was nothing like it before that time: Usenet, forums, AOL chatrooms, and BBSes didn't give anywhere near the same kind of connection or experience that Facebook circa 2008 did. There is no inherent reason that there must be something like it afterward. TikTok isn't really comparable to Facebook; it doesn't lend itself to the same kind of communication or connection. Twitter (which may now be dying) and its decentralized imitator Mastodon may come closest, but they don't encourage the kind of long-form posts that Facebook does, nor do they have the same ability to build out your IRL social network in the digital space that was the hallmark of early Facebook. There may, at some point, be some new company, service, or protocol that can to some meaningful extent replicate the experience of Facebook in its heyday; or that can, at least, command the attention and interest of as many people...but there's no guarantee that that will be the case, and everyone looking for X, Y, or Z to be "the next Facebook" are begging the question by assuming that there will be.
    - igetspam 4y ago
      I'm not being pedantic, I'm disagreeing with you. Friendster (2002) was wildly popular. LiveJournal (1999) was huge. The things you list (Usenet, BBSes, etc) we're the precursors but they were not social media where LiveJournal was (to an extent) and Friendster is arguably the original. There was something before Facebook and MySpace and there will be something after. Facebook is neither unique enough nor important enough to hold in this level of esteem. It is and always has been derivative.
IgorPartola 4y ago
They use Discord and WhatsApp. “Social networks” as such turned into basically games of meme-meme-ad and that is an awful experience. Social is lost there entirely, it’s just a machine for getting your attention with memes and then showing you ads instead. If you want to communicate with people in any meaningful way, FB is useless. So Gen Z has been using tools that actually help them stay in touch with people and form relationships rather than staring at ads all day. I did a pool recently of a live audience of about 40 18-22 year olds. Two have Facebook accounts, one to pull up her baby pics her mom posted on there and the other doesn’t use his at all. The rest didn’t bother registering. Instagram I think was 4 people, who only use it as a messenger. That’s it.