4 ms·

I'm not sure you can say that when the market cap is still 10x car companies that deliver orders of magnitude more cars than them. Even a high growth car compan

by _uhtu 4y ago

I'm not sure you can say that when the market cap is still 10x car companies that deliver orders of magnitude more cars than them. Even a high growth car company wouldn't justify that valuation. No, Tesla is still very overpriced for a car company based on hype.

klyrs 4y ago
> The latest blow came on January 3rd... It lost 12% of its value—roughly $50bn, or one Ford Motor Company—in a day. It's not going to completely correct in a day. As you note, its value may be inflated by two orders of magnitude. Musk's hijinks with Twitter have cost him dearly in investor confidence -- both indirectly, as his behavior there is erratic, and directly, as his loans for that deal are backed with Tesla stock. And then there's the non-delivery of FSD, which is the real "dream" that he's been selling so hard.
sumeno 4y ago
It's very overpriced as a tech company for what it actually delivers as well
DennisP 4y ago
I'm not gonna say TSLA isn't overpriced but number of cars isn't a great metric. Let's look at some financials: Tesla: mcap $388B, debt $9B, op income $12B, free cash flow $9B GM: mcap $49B, debt $110B, op income $10B, free cash flow $1B Ford: mcap $48B, debt $139B, op income $11B, free cash flow $3B Tesla makes more money than Ford or GM, while having much less debt. The fact that they sell fewer cars means their margins are higher, and they have more room to grow. Maybe they shouldn't be worth eight times more than Ford or GM, but they should definitely be worth more. And if you believe that the industry is going electric, then Tesla is already there, while legacy auto has a lot of work to do, and Tesla's low debt load makes them better positioned to do lots of R&D.
- rllearneratwork 4y ago
  yeah, and then there is a "little" asset like Superchargers network which makes Tesla ownership, at least in US, much more attractive. Edit. I'm not implying that Tesla is fairly priced, underpriced or overpriced. But this whole situation reminds me a time when I invested in Tesla IPO after reading lots of "Don't DO IT!" articles in media.
- panick21_ 4y ago
  And Tesla is still growing at amazing rates. So by now I would say it under-prized.
- gitfan86 4y ago
  What should worry GM investors even more is that GM has made EV goals over the past 7 years that they have failed to meet by a long shot. AND today they are still claiming that they will sell more EVs than Tesla in 2025 AND all of their profit comes from ICE cars/trucks today. It is totally valid to criticize musk for not delivering a full self driving car on when he said he would, but that hasn't put the profitability of the company at risk. If GM cannot deliver a volume Car at a profit in a world where ICE is illegal what is going to happen?
- KKKKkkkk1 4y ago
  Debt in itself doesn't matter when you value a company. What you want to look at is shareholder equity, which is assets net of liabilities. When you look at that indicator, Tesla comes behind GM and Ford. Tesla: $31.0 bn GM: $65.3 bn Ford: $42.1 bn
  - DennisP 4y ago
    That's a good way to look at it, sure. But it includes the value of fixed assets like factories. Debt compared to income is still a valuable indicator, since it's income that makes the debt payments, and also pays for things like R&D.
  - megaman821 4y ago
    You can quibble with the real value of GM and Ford's assets. If I built a factory for a billion dollars that makes horse buggies, is it actually worth a billion dollars if I was forced to liquidate it?
    - deleted 4y ago
      [deleted]
elurg 4y ago
Car companies deserve to have a severely depressed valuation because they're currently being forced to transition away from internal combustion. The ICE manufacturing industry is the worst one to be in because government are determined to kill you. Tesla doesn't have this overhang and is also growing very fast.
- throwayyy479087 4y ago
  Car companies arguably operate in _the_ most heavily competitive and capital intensive industry on Earth. Like airlines, there's an argument that they can only manage to exist due to government subsidy. If Tesla evaporated tomorrow, Hyundai/Kia would likely eat their lunch; in a few years, GM will be ready. It's a brutal business, which is why I think it's fascinating.

by _uhtu 4y ago

klyrs 4y ago

> The latest blow came on January 3rd... It lost 12% of its value—roughly $50bn, or one Ford Motor Company—in a day. It's not going to completely correct in a day. As you note, its value may be inflated by two orders of magnitude. Musk's hijinks with Twitter have cost him dearly in investor confidence -- both indirectly, as his behavior there is erratic, and directly, as his loans for that deal are backed with Tesla stock. And then there's the non-delivery of FSD, which is the real "dream" that he's been selling so hard.

sumeno 4y ago

It's very overpriced as a tech company for what it actually delivers as well

DennisP 4y ago

I'm not gonna say TSLA isn't overpriced but number of cars isn't a great metric. Let's look at some financials: Tesla: mcap $388B, debt $9B, op income $12B, free cash flow $9B GM: mcap $49B, debt $110B, op income $10B, free cash flow $1B Ford: mcap $48B, debt $139B, op income $11B, free cash flow $3B Tesla makes more money than Ford or GM, while having much less debt. The fact that they sell fewer cars means their margins are higher, and they have more room to grow. Maybe they shouldn't be worth eight times more than Ford or GM, but they should definitely be worth more. And if you believe that the industry is going electric, then Tesla is already there, while legacy auto has a lot of work to do, and Tesla's low debt load makes them better positioned to do lots of R&D.

rllearneratwork 4y ago
yeah, and then there is a "little" asset like Superchargers network which makes Tesla ownership, at least in US, much more attractive. Edit. I'm not implying that Tesla is fairly priced, underpriced or overpriced. But this whole situation reminds me a time when I invested in Tesla IPO after reading lots of "Don't DO IT!" articles in media.
panick21_ 4y ago
And Tesla is still growing at amazing rates. So by now I would say it under-prized.
gitfan86 4y ago
What should worry GM investors even more is that GM has made EV goals over the past 7 years that they have failed to meet by a long shot. AND today they are still claiming that they will sell more EVs than Tesla in 2025 AND all of their profit comes from ICE cars/trucks today. It is totally valid to criticize musk for not delivering a full self driving car on when he said he would, but that hasn't put the profitability of the company at risk. If GM cannot deliver a volume Car at a profit in a world where ICE is illegal what is going to happen?
KKKKkkkk1 4y ago
Debt in itself doesn't matter when you value a company. What you want to look at is shareholder equity, which is assets net of liabilities. When you look at that indicator, Tesla comes behind GM and Ford. Tesla: $31.0 bn GM: $65.3 bn Ford: $42.1 bn
- DennisP 4y ago
  That's a good way to look at it, sure. But it includes the value of fixed assets like factories. Debt compared to income is still a valuable indicator, since it's income that makes the debt payments, and also pays for things like R&D.
- megaman821 4y ago
  You can quibble with the real value of GM and Ford's assets. If I built a factory for a billion dollars that makes horse buggies, is it actually worth a billion dollars if I was forced to liquidate it?
  - deleted 4y ago
    [deleted]

elurg 4y ago

Car companies deserve to have a severely depressed valuation because they're currently being forced to transition away from internal combustion. The ICE manufacturing industry is the worst one to be in because government are determined to kill you. Tesla doesn't have this overhang and is also growing very fast.

throwayyy479087 4y ago
Car companies arguably operate in _the_ most heavily competitive and capital intensive industry on Earth. Like airlines, there's an argument that they can only manage to exist due to government subsidy. If Tesla evaporated tomorrow, Hyundai/Kia would likely eat their lunch; in a few years, GM will be ready. It's a brutal business, which is why I think it's fascinating.